Correlation Between Optima Prima and Intraco Penta

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

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

Diversification Opportunities for Optima Prima and Intraco Penta

0.21

Correlation Coefficient

Optima Prima  Intraco Penta

Modest diversification

The 3 months correlation between Optima and Intraco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Optima Prima Metal and Intraco Penta Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intraco Penta Tbk and Optima Prima 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 Optima Prima Metal are associated (or correlated) with Intraco Penta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intraco Penta Tbk has no effect on the direction of Optima Prima i.e., Optima Prima and Intraco Penta go up and down completely randomly.

Pair Corralation between Optima Prima and Intraco Penta

Assuming the 90 days trading horizon Optima Prima is expected to generate 26.79 times less return on investment than Intraco Penta. But when comparing it to its historical volatility, Optima Prima Metal is 5.17 times less risky than Intraco Penta. It trades about 0.0 of its potential returns per unit of risk. Intraco Penta Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Intraco Penta Tbk on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Intraco Penta Tbk or generate 0.0% return on investment over 90 days.

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

Optima Prima Metal  vs.  Intraco Penta Tbk

Optima Prima Metal

Risk-Adjusted Performance

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 quite persistent forward-looking signals, Optima Prima is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Intraco Penta Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intraco Penta Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Intraco Penta may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Optima Prima and Intraco Penta

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

The idea behind Optima Prima Metal and Intraco Penta 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.