Correlation Between Communication Cable and PT Charlie

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

By analyzing existing cross correlation between Communication Cable Systems and PT Charlie Hospital, you can compare the effects of market volatilities on Communication Cable and PT Charlie 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 Communication Cable with a short position of PT Charlie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communication Cable and PT Charlie.

Diversification Opportunities for Communication Cable and PT Charlie

0.51

Correlation Coefficient

Communication Cable  PT Charlie

Very weak diversification

The 3 months correlation between Communication and RSCH is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Communication Cable Systems and PT Charlie Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Charlie Hospital and Communication Cable 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 Communication Cable Systems are associated (or correlated) with PT Charlie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Charlie Hospital has no effect on the direction of Communication Cable i.e., Communication Cable and PT Charlie go up and down completely randomly.

Pair Corralation between Communication Cable and PT Charlie

Assuming the 90 days trading horizon Communication Cable Systems is expected to generate 1.51 times more return on investment than PT Charlie. However, Communication Cable is 1.51 times more volatile than PT Charlie Hospital. It trades about 0.14 of its potential returns per unit of risk. PT Charlie Hospital is currently generating about 0.04 per unit of risk. If you would invest  25,600  in Communication Cable Systems on December 27, 2024 and sell it today you would earn a total of  13,400  from holding Communication Cable Systems or generate 52.34% return on investment over 90 days.

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

Communication Cable Systems  vs.  PT Charlie Hospital

Communication Cable

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Communication Cable Systems are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Communication Cable disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Charlie Hospital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Charlie Hospital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Charlie may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Communication Cable and PT Charlie

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

The idea behind Communication Cable Systems and PT Charlie Hospital 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.