Correlation Between Pembangunan Graha and Kirana Megatara

Can any of the company-specific risk be diversified away by investing in both Pembangunan Graha and Kirana Megatara 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 Pembangunan Graha and Kirana Megatara into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pembangunan Graha Lestari and Kirana Megatara Tbk, you can compare the effects of market volatilities on Pembangunan Graha and Kirana Megatara 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 Pembangunan Graha with a short position of Kirana Megatara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembangunan Graha and Kirana Megatara.

Diversification Opportunities for Pembangunan Graha and Kirana Megatara

0.77

Correlation Coefficient

Pembangunan Graha  Kirana Megatara

Poor diversification

The 3 months correlation between Pembangunan and Kirana is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pembangunan Graha Lestari and Kirana Megatara Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirana Megatara Tbk and Pembangunan Graha 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 Pembangunan Graha Lestari are associated (or correlated) with Kirana Megatara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirana Megatara Tbk has no effect on the direction of Pembangunan Graha i.e., Pembangunan Graha and Kirana Megatara go up and down completely randomly.

Pair Corralation between Pembangunan Graha and Kirana Megatara

Assuming the 90 days trading horizon Pembangunan Graha is expected to generate 3.66 times less return on investment than Kirana Megatara. But when comparing it to its historical volatility, Pembangunan Graha Lestari is 1.26 times less risky than Kirana Megatara. It trades about 0.05 of its potential returns per unit of risk. Kirana Megatara Tbk is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  22,800  in Kirana Megatara Tbk on September 13, 2024 and sell it today you would earn a total of  9,200  from holding Kirana Megatara Tbk or generate 40.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Pembangunan Graha Lestari  vs.  Kirana Megatara Tbk

Pembangunan Graha Lestari

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pembangunan Graha Lestari are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pembangunan Graha may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kirana Megatara Tbk

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kirana Megatara Tbk are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Kirana Megatara disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pembangunan Graha and Kirana Megatara

The main advantage of trading using opposite Pembangunan Graha and Kirana Megatara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembangunan Graha position performs unexpectedly, Kirana Megatara 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 Kirana Megatara will offset losses from the drop in Kirana Megatara's long position.

The idea behind Pembangunan Graha Lestari and Kirana Megatara Tbk 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.