Correlation Between Gunung Raja and Singaraja Putra

Can any of the company-specific risk be diversified away by investing in both Gunung Raja and Singaraja Putra at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Gunung Raja and Singaraja Putra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gunung Raja Paksi and Singaraja Putra, you can compare the effects of market volatilities on Gunung Raja and Singaraja Putra and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Gunung Raja with a short position of Singaraja Putra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunung Raja and Singaraja Putra.

Diversification Opportunities for Gunung Raja and Singaraja Putra

0.03

Correlation Coefficient

Gunung Raja  Singaraja Putra

Significant diversification

The 3 months correlation between Gunung and Singaraja is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gunung Raja Paksi and Singaraja Putra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singaraja Putra and Gunung Raja is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Gunung Raja Paksi are associated (or correlated) with Singaraja Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singaraja Putra has no effect on the direction of Gunung Raja i.e., Gunung Raja and Singaraja Putra go up and down completely randomly.

Pair Corralation between Gunung Raja and Singaraja Putra

Assuming the 90 days trading horizon Gunung Raja is expected to generate 2.04 times less return on investment than Singaraja Putra. In addition to that, Gunung Raja is 2.05 times more volatile than Singaraja Putra. It trades about 0.04 of its total potential returns per unit of risk. Singaraja Putra is currently generating about 0.17 per unit of volatility. If you would invest  273,000  in Singaraja Putra on September 18, 2024 and sell it today you would earn a total of  227,000  from holding Singaraja Putra or generate 83.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Gunung Raja Paksi  vs.  Singaraja Putra

Gunung Raja Paksi

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gunung Raja Paksi are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Gunung Raja disclosed solid returns over the last few months and may actually be approaching a breakup point.

Singaraja Putra

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singaraja Putra are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Singaraja Putra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gunung Raja and Singaraja Putra

The main advantage of trading using opposite Gunung Raja and Singaraja Putra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gunung Raja position performs unexpectedly, Singaraja Putra can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Singaraja Putra will offset losses from the drop in Singaraja Putra's long position.

The idea behind Gunung Raja Paksi and Singaraja Putra pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.