Correlation Between Pembangunan Graha and Integra Indocabinet

Can any of the company-specific risk be diversified away by investing in both Pembangunan Graha and Integra Indocabinet 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 Integra Indocabinet 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 Integra Indocabinet Tbk, you can compare the effects of market volatilities on Pembangunan Graha and Integra Indocabinet 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 Integra Indocabinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembangunan Graha and Integra Indocabinet.

Diversification Opportunities for Pembangunan Graha and Integra Indocabinet

0.74

Correlation Coefficient

Pembangunan Graha  Integra Indocabinet

Poor diversification

The 3 months correlation between Pembangunan and Integra is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pembangunan Graha Lestari and Integra Indocabinet Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra Indocabinet 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 Integra Indocabinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra Indocabinet Tbk has no effect on the direction of Pembangunan Graha i.e., Pembangunan Graha and Integra Indocabinet go up and down completely randomly.

Pair Corralation between Pembangunan Graha and Integra Indocabinet

Assuming the 90 days trading horizon Pembangunan Graha Lestari is expected to under-perform the Integra Indocabinet. In addition to that, Pembangunan Graha is 1.41 times more volatile than Integra Indocabinet Tbk. It trades about -0.01 of its total potential returns per unit of risk. Integra Indocabinet Tbk is currently generating about 0.01 per unit of volatility. If you would invest  37,200  in Integra Indocabinet Tbk on September 14, 2024 and sell it today you would lose (2,000) from holding Integra Indocabinet Tbk or give up 5.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Pembangunan Graha Lestari  vs.  Integra Indocabinet 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.

Integra Indocabinet Tbk

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Integra Indocabinet Tbk are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Integra Indocabinet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pembangunan Graha and Integra Indocabinet

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

The idea behind Pembangunan Graha Lestari and Integra Indocabinet 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.