Correlation Between Panca Budi and Intanwijaya Internasional
Can any of the company-specific risk be diversified away by investing in both Panca Budi and Intanwijaya Internasional 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 Panca Budi and Intanwijaya Internasional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Panca Budi Idaman and Intanwijaya Internasional Tbk, you can compare the effects of market volatilities on Panca Budi and Intanwijaya Internasional 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 Panca Budi with a short position of Intanwijaya Internasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panca Budi and Intanwijaya Internasional.
Diversification Opportunities for Panca Budi and Intanwijaya Internasional
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Panca and Intanwijaya is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Panca Budi Idaman and Intanwijaya Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intanwijaya Internasional and Panca Budi 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 Panca Budi Idaman are associated (or correlated) with Intanwijaya Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intanwijaya Internasional has no effect on the direction of Panca Budi i.e., Panca Budi and Intanwijaya Internasional go up and down completely randomly.
Pair Corralation between Panca Budi and Intanwijaya Internasional
Assuming the 90 days trading horizon Panca Budi Idaman is expected to generate 0.97 times more return on investment than Intanwijaya Internasional. However, Panca Budi Idaman is 1.03 times less risky than Intanwijaya Internasional. It trades about 0.11 of its potential returns per unit of risk. Intanwijaya Internasional Tbk is currently generating about 0.04 per unit of risk. If you would invest 32,656 in Panca Budi Idaman on August 25, 2024 and sell it today you would earn a total of 20,344 from holding Panca Budi Idaman or generate 62.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Panca Budi Idaman vs. Intanwijaya Internasional Tbk
Performance |
| Timeline |
| Panca Budi Idaman |
| Intanwijaya Internasional |
Panca Budi and Intanwijaya Internasional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Panca Budi and Intanwijaya Internasional
The main advantage of trading using opposite Panca Budi and Intanwijaya Internasional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panca Budi position performs unexpectedly, Intanwijaya Internasional 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 Intanwijaya Internasional will offset losses from the drop in Intanwijaya Internasional's long position.| Panca Budi vs. Mitrabara Adiperdana PT | Panca Budi vs. Mark Dynamics Indonesia | Panca Budi vs. Prodia Widyahusada Tbk | Panca Budi vs. Selamat Sempurna Tbk |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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