Correlation Between Aneka Gas and Puradelta Lestari

Can any of the company-specific risk be diversified away by investing in both Aneka Gas and Puradelta Lestari 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 Aneka Gas and Puradelta Lestari into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aneka Gas Industri and Puradelta Lestari PT, you can compare the effects of market volatilities on Aneka Gas and Puradelta Lestari 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 Aneka Gas with a short position of Puradelta Lestari. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Gas and Puradelta Lestari.

Diversification Opportunities for Aneka Gas and Puradelta Lestari

0.87

Correlation Coefficient

Aneka Gas  Puradelta Lestari

Very poor diversification

The 3 months correlation between Aneka and Puradelta is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Gas Industri and Puradelta Lestari PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puradelta Lestari and Aneka Gas 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 Aneka Gas Industri are associated (or correlated) with Puradelta Lestari. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puradelta Lestari has no effect on the direction of Aneka Gas i.e., Aneka Gas and Puradelta Lestari go up and down completely randomly.

Pair Corralation between Aneka Gas and Puradelta Lestari

Assuming the 90 days trading horizon Aneka Gas Industri is expected to under-perform the Puradelta Lestari. In addition to that, Aneka Gas is 1.66 times more volatile than Puradelta Lestari PT. It trades about -0.04 of its total potential returns per unit of risk. Puradelta Lestari PT is currently generating about -0.02 per unit of volatility. If you would invest  14,458  in Puradelta Lestari PT on December 4, 2024 and sell it today you would lose (1,258) from holding Puradelta Lestari PT or give up 8.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Aneka Gas Industri  vs.  Puradelta Lestari PT

Aneka Gas Industri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aneka Gas Industri 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Puradelta Lestari

Risk-Adjusted Performance

Very Weak

Over the last 90 days Puradelta Lestari PT 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Aneka Gas and Puradelta Lestari

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

The idea behind Aneka Gas Industri and Puradelta Lestari PT 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.