Correlation Between Optima Prima and PT Hatten

Can any of the company-specific risk be diversified away by investing in both Optima Prima and PT Hatten 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 PT Hatten 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 PT Hatten Bali, you can compare the effects of market volatilities on Optima Prima and PT Hatten 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 PT Hatten. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Prima and PT Hatten.

Diversification Opportunities for Optima Prima and PT Hatten

0.76

Correlation Coefficient

Optima Prima  PT Hatten

Poor diversification

The 3 months correlation between Optima and WINE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Optima Prima Metal and PT Hatten Bali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Hatten Bali 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 PT Hatten. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Hatten Bali has no effect on the direction of Optima Prima i.e., Optima Prima and PT Hatten go up and down completely randomly.

Pair Corralation between Optima Prima and PT Hatten

Assuming the 90 days trading horizon Optima Prima Metal is expected to generate 0.89 times more return on investment than PT Hatten. However, Optima Prima Metal is 1.12 times less risky than PT Hatten. It trades about 0.01 of its potential returns per unit of risk. PT Hatten Bali is currently generating about -0.38 per unit of risk. If you would invest  5,000  in Optima Prima Metal on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Optima Prima Metal or generate 0.0% return on investment over 90 days.

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

Optima Prima Metal  vs.  PT Hatten Bali

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PT Hatten Bali

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Hatten Bali 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Optima Prima and PT Hatten

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

The idea behind Optima Prima Metal and PT Hatten Bali 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.