Correlation Between Kedawung Setia and Prasidha Aneka

Can any of the company-specific risk be diversified away by investing in both Kedawung Setia and Prasidha Aneka 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 Kedawung Setia and Prasidha Aneka into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kedawung Setia Industrial and Prasidha Aneka Niaga, you can compare the effects of market volatilities on Kedawung Setia and Prasidha Aneka 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 Kedawung Setia with a short position of Prasidha Aneka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedawung Setia and Prasidha Aneka.

Diversification Opportunities for Kedawung Setia and Prasidha Aneka

0.16

Correlation Coefficient

Kedawung Setia  Prasidha Aneka

Average diversification

The 3 months correlation between Kedawung and Prasidha is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kedawung Setia Industrial and Prasidha Aneka Niaga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prasidha Aneka Niaga and Kedawung Setia 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 Kedawung Setia Industrial are associated (or correlated) with Prasidha Aneka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prasidha Aneka Niaga has no effect on the direction of Kedawung Setia i.e., Kedawung Setia and Prasidha Aneka go up and down completely randomly.

Pair Corralation between Kedawung Setia and Prasidha Aneka

Assuming the 90 days trading horizon Kedawung Setia Industrial is expected to generate 2.08 times more return on investment than Prasidha Aneka. However, Kedawung Setia is 2.08 times more volatile than Prasidha Aneka Niaga. It trades about 0.08 of its potential returns per unit of risk. Prasidha Aneka Niaga is currently generating about -0.04 per unit of risk. If you would invest  37,500  in Kedawung Setia Industrial on September 3, 2024 and sell it today you would earn a total of  5,300  from holding Kedawung Setia Industrial or generate 14.13% return on investment over 90 days.

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

Kedawung Setia Industrial  vs.  Prasidha Aneka Niaga

Kedawung Setia Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kedawung Setia Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Kedawung Setia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Prasidha Aneka Niaga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prasidha Aneka Niaga has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Prasidha Aneka 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 Kedawung Setia and Prasidha Aneka

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

The idea behind Kedawung Setia Industrial and Prasidha Aneka Niaga 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.