Correlation Between Alfa Energi and Rukun Raharja

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

By analyzing existing cross correlation between Alfa Energi Investama and Rukun Raharja Tbk, you can compare the effects of market volatilities on Alfa Energi and Rukun Raharja 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 Alfa Energi with a short position of Rukun Raharja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Energi and Rukun Raharja.

Diversification Opportunities for Alfa Energi and Rukun Raharja

-0.78

Correlation Coefficient

Alfa Energi  Rukun Raharja

Pay attention - limited upside

The 3 months correlation between Alfa and Rukun is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Energi Investama and Rukun Raharja Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rukun Raharja Tbk and Alfa Energi 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 Alfa Energi Investama are associated (or correlated) with Rukun Raharja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rukun Raharja Tbk has no effect on the direction of Alfa Energi i.e., Alfa Energi and Rukun Raharja go up and down completely randomly.

Pair Corralation between Alfa Energi and Rukun Raharja

Assuming the 90 days trading horizon Alfa Energi Investama is expected to under-perform the Rukun Raharja. But the stock apears to be less risky and, when comparing its historical volatility, Alfa Energi Investama is 2.4 times less risky than Rukun Raharja. The stock trades about -0.11 of its potential returns per unit of risk. The Rukun Raharja Tbk is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  120,500  in Rukun Raharja Tbk on September 14, 2024 and sell it today you would earn a total of  163,500  from holding Rukun Raharja Tbk or generate 135.68% return on investment over 90 days.

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

Alfa Energi Investama  vs.  Rukun Raharja Tbk

Alfa Energi Investama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Energi Investama 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Rukun Raharja Tbk

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rukun Raharja Tbk are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Rukun Raharja disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfa Energi and Rukun Raharja

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

The idea behind Alfa Energi Investama and Rukun Raharja Tbk 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.