Correlation Between Capri Holdings and Pertamina Geothermal

Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Pertamina Geothermal 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 Capri Holdings and Pertamina Geothermal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capri Holdings and Pertamina Geothermal Energy, you can compare the effects of market volatilities on Capri Holdings and Pertamina Geothermal 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 Capri Holdings with a short position of Pertamina Geothermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Pertamina Geothermal.

Diversification Opportunities for Capri Holdings and Pertamina Geothermal

0.54

Correlation Coefficient

Capri Holdings  Pertamina Geothermal

Very weak diversification

The 3 months correlation between Capri and Pertamina is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Pertamina Geothermal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pertamina Geothermal and Capri Holdings 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 Capri Holdings are associated (or correlated) with Pertamina Geothermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pertamina Geothermal has no effect on the direction of Capri Holdings i.e., Capri Holdings and Pertamina Geothermal go up and down completely randomly.

Pair Corralation between Capri Holdings and Pertamina Geothermal

Given the investment horizon of 90 days Capri Holdings is expected to generate 1.09 times more return on investment than Pertamina Geothermal. However, Capri Holdings is 1.09 times more volatile than Pertamina Geothermal Energy. It trades about 0.01 of its potential returns per unit of risk. Pertamina Geothermal Energy is currently generating about -0.06 per unit of risk. If you would invest  2,052  in Capri Holdings on December 30, 2024 and sell it today you would lose (22.00) from holding Capri Holdings or give up 1.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Capri Holdings  vs.  Pertamina Geothermal Energy

Capri Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capri Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Capri Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pertamina Geothermal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pertamina Geothermal Energy 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 Capri Holdings and Pertamina Geothermal

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

The idea behind Capri Holdings and Pertamina Geothermal Energy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.