Correlation Between PT Hanjaya and Immersion

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

By analyzing existing cross correlation between PT Hanjaya Mandala and Immersion, you can compare the effects of market volatilities on PT Hanjaya and Immersion 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 PT Hanjaya with a short position of Immersion. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Hanjaya and Immersion.

Diversification Opportunities for PT Hanjaya and Immersion

-0.42

Correlation Coefficient

PT Hanjaya  Immersion

Very good diversification

The 3 months correlation between PHJMF and Immersion is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding PT Hanjaya Mandala and Immersion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immersion and PT Hanjaya 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 PT Hanjaya Mandala are associated (or correlated) with Immersion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immersion has no effect on the direction of PT Hanjaya i.e., PT Hanjaya and Immersion go up and down completely randomly.

Pair Corralation between PT Hanjaya and Immersion

Assuming the 90 days horizon PT Hanjaya Mandala is expected to generate 3.96 times more return on investment than Immersion. However, PT Hanjaya is 3.96 times more volatile than Immersion. It trades about 0.05 of its potential returns per unit of risk. Immersion is currently generating about 0.03 per unit of risk. If you would invest  4.95  in PT Hanjaya Mandala on September 20, 2024 and sell it today you would lose (0.95) from holding PT Hanjaya Mandala or give up 19.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.66%
Values	Daily Returns

PT Hanjaya Mandala  vs.  Immersion

PT Hanjaya Mandala

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Hanjaya Mandala are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, PT Hanjaya is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Immersion

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Immersion are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Immersion is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PT Hanjaya and Immersion

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

The idea behind PT Hanjaya Mandala and Immersion 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.