Correlation Between Karya Bersama and Putra Rajawali

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

By analyzing existing cross correlation between Karya Bersama Anugerah and Putra Rajawali Kencana, you can compare the effects of market volatilities on Karya Bersama and Putra Rajawali 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 Karya Bersama with a short position of Putra Rajawali. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karya Bersama and Putra Rajawali.

Diversification Opportunities for Karya Bersama and Putra Rajawali

-0.31

Correlation Coefficient

Karya Bersama  Putra Rajawali

Very good diversification

The 3 months correlation between Karya and Putra is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Karya Bersama Anugerah and Putra Rajawali Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putra Rajawali Kencana and Karya Bersama 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 Karya Bersama Anugerah are associated (or correlated) with Putra Rajawali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putra Rajawali Kencana has no effect on the direction of Karya Bersama i.e., Karya Bersama and Putra Rajawali go up and down completely randomly.

Pair Corralation between Karya Bersama and Putra Rajawali

Assuming the 90 days trading horizon Karya Bersama Anugerah is expected to under-perform the Putra Rajawali. But the stock apears to be less risky and, when comparing its historical volatility, Karya Bersama Anugerah is 1.7 times less risky than Putra Rajawali. The stock trades about -0.14 of its potential returns per unit of risk. The Putra Rajawali Kencana is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Putra Rajawali Kencana on October 24, 2024 and sell it today you would earn a total of  300.00  from holding Putra Rajawali Kencana or generate 27.27% return on investment over 90 days.

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

Karya Bersama Anugerah  vs.  Putra Rajawali Kencana

Karya Bersama Anugerah

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Karya Bersama Anugerah has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Karya Bersama is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Putra Rajawali Kencana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putra Rajawali Kencana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Putra Rajawali 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 Karya Bersama and Putra Rajawali

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

The idea behind Karya Bersama Anugerah and Putra Rajawali Kencana 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.