Correlation Between Pudjiadi Sons and Langgeng Makmur
Can any of the company-specific risk be diversified away by investing in both Pudjiadi Sons and Langgeng Makmur 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 Pudjiadi Sons and Langgeng Makmur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pudjiadi Sons Tbk and Langgeng Makmur Industri, you can compare the effects of market volatilities on Pudjiadi Sons and Langgeng Makmur 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 Pudjiadi Sons with a short position of Langgeng Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pudjiadi Sons and Langgeng Makmur.
Diversification Opportunities for Pudjiadi Sons and Langgeng Makmur
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pudjiadi and Langgeng is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pudjiadi Sons Tbk and Langgeng Makmur Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Langgeng Makmur Industri and Pudjiadi Sons 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 Pudjiadi Sons Tbk are associated (or correlated) with Langgeng Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Langgeng Makmur Industri has no effect on the direction of Pudjiadi Sons i.e., Pudjiadi Sons and Langgeng Makmur go up and down completely randomly.
Pair Corralation between Pudjiadi Sons and Langgeng Makmur
Assuming the 90 days trading horizon Pudjiadi Sons Tbk is expected to generate 0.73 times more return on investment than Langgeng Makmur. However, Pudjiadi Sons Tbk is 1.37 times less risky than Langgeng Makmur. It trades about 0.51 of its potential returns per unit of risk. Langgeng Makmur Industri is currently generating about 0.18 per unit of risk. If you would invest 45,400 in Pudjiadi Sons Tbk on August 27, 2024 and sell it today you would earn a total of 90,600 from holding Pudjiadi Sons Tbk or generate 199.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Pudjiadi Sons Tbk vs. Langgeng Makmur Industri
Performance |
| Timeline |
| Pudjiadi Sons Tbk |
| Langgeng Makmur Industri |
Pudjiadi Sons and Langgeng Makmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pudjiadi Sons and Langgeng Makmur
The main advantage of trading using opposite Pudjiadi Sons and Langgeng Makmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pudjiadi Sons position performs unexpectedly, Langgeng Makmur 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 Langgeng Makmur will offset losses from the drop in Langgeng Makmur's long position.| Pudjiadi Sons vs. Grand Kartech Tbk | Pudjiadi Sons vs. First Media Tbk | Pudjiadi Sons vs. Eastparc Hotel Tbk | Pudjiadi Sons vs. Hotel Sahid Jaya |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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