Correlation Between PT Data and PT Techno9

Can any of the company-specific risk be diversified away by investing in both PT Data and PT Techno9 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 PT Data and PT Techno9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Data Sinergitama and PT Techno9 Indonesia, you can compare the effects of market volatilities on PT Data and PT Techno9 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 PT Data with a short position of PT Techno9. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Data and PT Techno9.

Diversification Opportunities for PT Data and PT Techno9

0.48

Correlation Coefficient

PT Data  PT Techno9

Very weak diversification

The 3 months correlation between ELIT and NINE is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PT Data Sinergitama and PT Techno9 Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Techno9 Indonesia and PT Data 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 PT Data Sinergitama are associated (or correlated) with PT Techno9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Techno9 Indonesia has no effect on the direction of PT Data i.e., PT Data and PT Techno9 go up and down completely randomly.

Pair Corralation between PT Data and PT Techno9

Assuming the 90 days trading horizon PT Data Sinergitama is expected to generate 1.5 times more return on investment than PT Techno9. However, PT Data is 1.5 times more volatile than PT Techno9 Indonesia. It trades about 0.11 of its potential returns per unit of risk. PT Techno9 Indonesia is currently generating about 0.14 per unit of risk. If you would invest  11,800  in PT Data Sinergitama on December 29, 2024 and sell it today you would earn a total of  5,900  from holding PT Data Sinergitama or generate 50.0% return on investment over 90 days.

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

PT Data Sinergitama  vs.  PT Techno9 Indonesia

PT Data Sinergitama

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Data Sinergitama are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Data disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Techno9 Indonesia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Techno9 Indonesia are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Techno9 disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Data and PT Techno9

The main advantage of trading using opposite PT Data and PT Techno9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Data position performs unexpectedly, PT Techno9 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 Techno9 will offset losses from the drop in PT Techno9's long position.

The idea behind PT Data Sinergitama and PT Techno9 Indonesia 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.