Correlation Between Pratama Abadi and Uni Charm

Can any of the company-specific risk be diversified away by investing in both Pratama Abadi and Uni Charm 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 Pratama Abadi and Uni Charm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pratama Abadi Nusa and Uni Charm Indonesia, you can compare the effects of market volatilities on Pratama Abadi and Uni Charm 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 Pratama Abadi with a short position of Uni Charm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pratama Abadi and Uni Charm.

Diversification Opportunities for Pratama Abadi and Uni Charm

-0.71

Correlation Coefficient

Pratama Abadi  Uni Charm

Pay attention - limited upside

The 3 months correlation between Pratama and Uni is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pratama Abadi Nusa and Uni Charm Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni Charm Indonesia and Pratama Abadi 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 Pratama Abadi Nusa are associated (or correlated) with Uni Charm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni Charm Indonesia has no effect on the direction of Pratama Abadi i.e., Pratama Abadi and Uni Charm go up and down completely randomly.

Pair Corralation between Pratama Abadi and Uni Charm

Assuming the 90 days trading horizon Pratama Abadi Nusa is expected to generate 2.5 times more return on investment than Uni Charm. However, Pratama Abadi is 2.5 times more volatile than Uni Charm Indonesia. It trades about 0.24 of its potential returns per unit of risk. Uni Charm Indonesia is currently generating about -0.07 per unit of risk. If you would invest  493,796  in Pratama Abadi Nusa on September 30, 2024 and sell it today you would earn a total of  1,103,704  from holding Pratama Abadi Nusa or generate 223.51% return on investment over 90 days.

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

Pratama Abadi Nusa  vs.  Uni Charm Indonesia

Pratama Abadi Nusa

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pratama Abadi Nusa are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pratama Abadi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Uni Charm Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uni Charm Indonesia 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Pratama Abadi and Uni Charm

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

The idea behind Pratama Abadi Nusa and Uni Charm Indonesia 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.