Correlation Between Putra Mandiri and Gunung Raja

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

By analyzing existing cross correlation between Putra Mandiri Jembar and Gunung Raja Paksi, you can compare the effects of market volatilities on Putra Mandiri and Gunung Raja 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 Putra Mandiri with a short position of Gunung Raja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putra Mandiri and Gunung Raja.

Diversification Opportunities for Putra Mandiri and Gunung Raja

0.22

Correlation Coefficient

Putra Mandiri  Gunung Raja

Modest diversification

The 3 months correlation between Putra and Gunung is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Putra Mandiri Jembar and Gunung Raja Paksi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunung Raja Paksi and Putra Mandiri 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 Putra Mandiri Jembar are associated (or correlated) with Gunung Raja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunung Raja Paksi has no effect on the direction of Putra Mandiri i.e., Putra Mandiri and Gunung Raja go up and down completely randomly.

Pair Corralation between Putra Mandiri and Gunung Raja

Assuming the 90 days trading horizon Putra Mandiri Jembar is expected to under-perform the Gunung Raja. But the stock apears to be less risky and, when comparing its historical volatility, Putra Mandiri Jembar is 4.03 times less risky than Gunung Raja. The stock trades about -0.08 of its potential returns per unit of risk. The Gunung Raja Paksi is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  28,721  in Gunung Raja Paksi on September 19, 2024 and sell it today you would lose (921.00) from holding Gunung Raja Paksi or give up 3.21% of portfolio value over 90 days.

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

Putra Mandiri Jembar  vs.  Gunung Raja Paksi

Putra Mandiri Jembar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putra Mandiri Jembar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Gunung Raja Paksi

Risk-Adjusted Performance

3 of 100

Insignificant

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.

Pair Trading with Putra Mandiri and Gunung Raja

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

The idea behind Putra Mandiri Jembar and Gunung Raja Paksi 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.