Correlation Between Royalindo Investa and Catur Sentosa

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

By analyzing existing cross correlation between Royalindo Investa Wijaya and Catur Sentosa Adiprana, you can compare the effects of market volatilities on Royalindo Investa and Catur Sentosa 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 Royalindo Investa with a short position of Catur Sentosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalindo Investa and Catur Sentosa.

Diversification Opportunities for Royalindo Investa and Catur Sentosa

-0.65

Correlation Coefficient

Royalindo Investa  Catur Sentosa

Excellent diversification

The 3 months correlation between Royalindo and Catur is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Royalindo Investa Wijaya and Catur Sentosa Adiprana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catur Sentosa Adiprana and Royalindo Investa 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 Royalindo Investa Wijaya are associated (or correlated) with Catur Sentosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catur Sentosa Adiprana has no effect on the direction of Royalindo Investa i.e., Royalindo Investa and Catur Sentosa go up and down completely randomly.

Pair Corralation between Royalindo Investa and Catur Sentosa

Assuming the 90 days trading horizon Royalindo Investa Wijaya is expected to generate 2.67 times more return on investment than Catur Sentosa. However, Royalindo Investa is 2.67 times more volatile than Catur Sentosa Adiprana. It trades about 0.09 of its potential returns per unit of risk. Catur Sentosa Adiprana is currently generating about -0.06 per unit of risk. If you would invest  11,600  in Royalindo Investa Wijaya on December 31, 2024 and sell it today you would earn a total of  3,000  from holding Royalindo Investa Wijaya or generate 25.86% return on investment over 90 days.

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

Royalindo Investa Wijaya  vs.  Catur Sentosa Adiprana

Royalindo Investa Wijaya

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Royalindo Investa Wijaya are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Royalindo Investa disclosed solid returns over the last few months and may actually be approaching a breakup point.

Catur Sentosa Adiprana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Catur Sentosa Adiprana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Royalindo Investa and Catur Sentosa

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

The idea behind Royalindo Investa Wijaya and Catur Sentosa Adiprana 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.