Correlation Between Pollux Properti and Golden Flower

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

By analyzing existing cross correlation between Pollux Properti Indonesia and Golden Flower Tbk, you can compare the effects of market volatilities on Pollux Properti and Golden Flower 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 Pollux Properti with a short position of Golden Flower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pollux Properti and Golden Flower.

Diversification Opportunities for Pollux Properti and Golden Flower

0.11

Correlation Coefficient

Pollux Properti  Golden Flower

Average diversification

The 3 months correlation between Pollux and Golden is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Pollux Properti Indonesia and Golden Flower Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Flower Tbk and Pollux Properti 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 Pollux Properti Indonesia are associated (or correlated) with Golden Flower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Flower Tbk has no effect on the direction of Pollux Properti i.e., Pollux Properti and Golden Flower go up and down completely randomly.

Pair Corralation between Pollux Properti and Golden Flower

Assuming the 90 days trading horizon Pollux Properti Indonesia is expected to generate 0.48 times more return on investment than Golden Flower. However, Pollux Properti Indonesia is 2.07 times less risky than Golden Flower. It trades about -0.13 of its potential returns per unit of risk. Golden Flower Tbk is currently generating about -0.11 per unit of risk. If you would invest  13,400  in Pollux Properti Indonesia on March 2, 2024 and sell it today you would lose (1,300) from holding Pollux Properti Indonesia or give up 9.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pollux Properti Indonesia  vs.  Golden Flower Tbk

Pollux Properti Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pollux Properti Indonesia 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 basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Golden Flower Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Flower Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Golden Flower disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pollux Properti and Golden Flower

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

The idea behind Pollux Properti Indonesia and Golden Flower Tbk 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.