Correlation Between Arwana Citramulia and Panca Budi
Can any of the company-specific risk be diversified away by investing in both Arwana Citramulia and Panca Budi 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 Arwana Citramulia and Panca Budi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arwana Citramulia Tbk and Panca Budi Idaman, you can compare the effects of market volatilities on Arwana Citramulia and Panca Budi 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 Arwana Citramulia with a short position of Panca Budi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arwana Citramulia and Panca Budi.
Diversification Opportunities for Arwana Citramulia and Panca Budi
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arwana and Panca is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Arwana Citramulia Tbk and Panca Budi Idaman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panca Budi Idaman and Arwana Citramulia 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 Arwana Citramulia Tbk are associated (or correlated) with Panca Budi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panca Budi Idaman has no effect on the direction of Arwana Citramulia i.e., Arwana Citramulia and Panca Budi go up and down completely randomly.
Pair Corralation between Arwana Citramulia and Panca Budi
Assuming the 90 days trading horizon Arwana Citramulia is expected to generate 2.68 times less return on investment than Panca Budi. But when comparing it to its historical volatility, Arwana Citramulia Tbk is 1.22 times less risky than Panca Budi. It trades about 0.06 of its potential returns per unit of risk. Panca Budi Idaman is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 30,250 in Panca Budi Idaman on September 3, 2024 and sell it today you would earn a total of 21,750 from holding Panca Budi Idaman or generate 71.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arwana Citramulia Tbk vs. Panca Budi Idaman
Performance |
| Timeline |
| Arwana Citramulia Tbk |
| Panca Budi Idaman |
Arwana Citramulia and Panca Budi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arwana Citramulia and Panca Budi
The main advantage of trading using opposite Arwana Citramulia and Panca Budi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arwana Citramulia position performs unexpectedly, Panca Budi 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 Panca Budi will offset losses from the drop in Panca Budi's long position.| Arwana Citramulia vs. Asahimas Flat Glass | Arwana Citramulia vs. Astra Graphia Tbk | Arwana Citramulia vs. Ekadharma International Tbk | Arwana Citramulia vs. Akasha Wira International |
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Check out your portfolio center.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 Stocks Directory module to find actively traded stocks across global markets.
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