Correlation Between Puradelta Lestari and Triputra Agro

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

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

Diversification Opportunities for Puradelta Lestari and Triputra Agro

0.26

Correlation Coefficient

Puradelta Lestari  Triputra Agro

Modest diversification

The 3 months correlation between Puradelta and Triputra is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Puradelta Lestari PT and Triputra Agro Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triputra Agro Persada and Puradelta Lestari 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 Puradelta Lestari PT are associated (or correlated) with Triputra Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triputra Agro Persada has no effect on the direction of Puradelta Lestari i.e., Puradelta Lestari and Triputra Agro go up and down completely randomly.

Pair Corralation between Puradelta Lestari and Triputra Agro

Assuming the 90 days trading horizon Puradelta Lestari PT is expected to under-perform the Triputra Agro. But the stock apears to be less risky and, when comparing its historical volatility, Puradelta Lestari PT is 1.27 times less risky than Triputra Agro. The stock trades about -0.28 of its potential returns per unit of risk. The Triputra Agro Persada is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  76,000  in Triputra Agro Persada on December 4, 2024 and sell it today you would earn a total of  7,000  from holding Triputra Agro Persada or generate 9.21% return on investment over 90 days.

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

Puradelta Lestari PT  vs.  Triputra Agro Persada

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.

Triputra Agro Persada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Triputra Agro Persada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Triputra Agro is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Puradelta Lestari and Triputra Agro

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

The idea behind Puradelta Lestari PT and Triputra Agro Persada 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.