Correlation Between Intraco Penta and Optima Prima

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

By analyzing existing cross correlation between Intraco Penta Tbk and Optima Prima Metal, you can compare the effects of market volatilities on Intraco Penta and Optima Prima 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 Intraco Penta with a short position of Optima Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intraco Penta and Optima Prima.

Diversification Opportunities for Intraco Penta and Optima Prima

0.92

Correlation Coefficient

Intraco Penta  Optima Prima

Almost no diversification

The 3 months correlation between Intraco and Optima is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Intraco Penta Tbk and Optima Prima Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Prima Metal and Intraco Penta 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 Intraco Penta Tbk are associated (or correlated) with Optima Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Prima Metal has no effect on the direction of Intraco Penta i.e., Intraco Penta and Optima Prima go up and down completely randomly.

Pair Corralation between Intraco Penta and Optima Prima

Assuming the 90 days trading horizon Intraco Penta Tbk is expected to generate 3.25 times more return on investment than Optima Prima. However, Intraco Penta is 3.25 times more volatile than Optima Prima Metal. It trades about 0.1 of its potential returns per unit of risk. Optima Prima Metal is currently generating about 0.01 per unit of risk. If you would invest  1,200  in Intraco Penta Tbk on September 16, 2024 and sell it today you would earn a total of  100.00  from holding Intraco Penta Tbk or generate 8.33% return on investment over 90 days.

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

Intraco Penta Tbk  vs.  Optima Prima Metal

Intraco Penta Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intraco Penta Tbk 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.

Optima Prima Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optima Prima Metal 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.

Pair Trading with Intraco Penta and Optima Prima

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

The idea behind Intraco Penta Tbk and Optima Prima Metal 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.