Correlation Between PT Indonesia and PP Presisi

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

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

Diversification Opportunities for PT Indonesia and PP Presisi

-0.36

Correlation Coefficient

PT Indonesia  PP Presisi

Very good diversification

The 3 months correlation between IPCC and PPRE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PT Indonesia Kendaraan and PP Presisi Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PP Presisi Tbk and PT Indonesia 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 Indonesia Kendaraan are associated (or correlated) with PP Presisi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PP Presisi Tbk has no effect on the direction of PT Indonesia i.e., PT Indonesia and PP Presisi go up and down completely randomly.

Pair Corralation between PT Indonesia and PP Presisi

Assuming the 90 days trading horizon PT Indonesia Kendaraan is expected to generate 0.53 times more return on investment than PP Presisi. However, PT Indonesia Kendaraan is 1.88 times less risky than PP Presisi. It trades about 0.07 of its potential returns per unit of risk. PP Presisi Tbk is currently generating about -0.04 per unit of risk. If you would invest  70,500  in PT Indonesia Kendaraan on December 26, 2024 and sell it today you would earn a total of  3,500  from holding PT Indonesia Kendaraan or generate 4.96% return on investment over 90 days.

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

PT Indonesia Kendaraan  vs.  PP Presisi Tbk

PT Indonesia Kendaraan

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indonesia Kendaraan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, PT Indonesia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PP Presisi Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days PP Presisi Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PP Presisi 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 PT Indonesia and PP Presisi

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

The idea behind PT Indonesia Kendaraan and PP Presisi 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.