Correlation Between Andalan Sakti and Putra Rajawali

Can any of the company-specific risk be diversified away by investing in both Andalan Sakti and Putra Rajawali 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 Andalan Sakti and Putra Rajawali into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Andalan Sakti Primaindo and Putra Rajawali Kencana, you can compare the effects of market volatilities on Andalan Sakti and Putra Rajawali 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 Andalan Sakti with a short position of Putra Rajawali. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andalan Sakti and Putra Rajawali.

Diversification Opportunities for Andalan Sakti and Putra Rajawali

-0.39

Correlation Coefficient

Andalan Sakti  Putra Rajawali

Very good diversification

The 3 months correlation between Andalan and Putra is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Andalan Sakti Primaindo and Putra Rajawali Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putra Rajawali Kencana and Andalan Sakti 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 Andalan Sakti Primaindo are associated (or correlated) with Putra Rajawali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putra Rajawali Kencana has no effect on the direction of Andalan Sakti i.e., Andalan Sakti and Putra Rajawali go up and down completely randomly.

Pair Corralation between Andalan Sakti and Putra Rajawali

Assuming the 90 days trading horizon Andalan Sakti Primaindo is expected to generate 1.44 times more return on investment than Putra Rajawali. However, Andalan Sakti is 1.44 times more volatile than Putra Rajawali Kencana. It trades about 0.1 of its potential returns per unit of risk. Putra Rajawali Kencana is currently generating about -0.03 per unit of risk. If you would invest  13,200  in Andalan Sakti Primaindo on December 30, 2024 and sell it today you would earn a total of  4,600  from holding Andalan Sakti Primaindo or generate 34.85% return on investment over 90 days.

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

Andalan Sakti Primaindo  vs.  Putra Rajawali Kencana

Andalan Sakti Primaindo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Andalan Sakti Primaindo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Andalan Sakti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Putra Rajawali Kencana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putra Rajawali Kencana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Andalan Sakti and Putra Rajawali

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

The idea behind Andalan Sakti Primaindo and Putra Rajawali Kencana 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 Commodity Directory module to find actively traded commodities issued by global exchanges.