Correlation Between Agro Yasa and PT Primadaya

Can any of the company-specific risk be diversified away by investing in both Agro Yasa and PT Primadaya 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 Agro Yasa and PT Primadaya into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Agro Yasa and PT Primadaya

-0.03

Correlation Coefficient

Agro Yasa  PT Primadaya

Good diversification

The 3 months correlation between Agro and PDPP is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Agro Yasa Lestari and PT Primadaya Plastisindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Primadaya Plastisindo and Agro Yasa 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 Agro Yasa Lestari are associated (or correlated) with PT Primadaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Primadaya Plastisindo has no effect on the direction of Agro Yasa i.e., Agro Yasa and PT Primadaya go up and down completely randomly.

Pair Corralation between Agro Yasa and PT Primadaya

Assuming the 90 days trading horizon Agro Yasa Lestari is expected to generate 5.78 times more return on investment than PT Primadaya. However, Agro Yasa is 5.78 times more volatile than PT Primadaya Plastisindo. It trades about 0.39 of its potential returns per unit of risk. PT Primadaya Plastisindo is currently generating about -0.28 per unit of risk. If you would invest  6,100  in Agro Yasa Lestari on October 9, 2024 and sell it today you would earn a total of  7,400  from holding Agro Yasa Lestari or generate 121.31% return on investment over 90 days.

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

Agro Yasa Lestari  vs.  PT Primadaya Plastisindo

Agro Yasa Lestari

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Yasa Lestari are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Agro Yasa disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Primadaya Plastisindo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Agro Yasa and PT Primadaya

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

The idea behind Agro Yasa Lestari and PT Primadaya Plastisindo 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.