Correlation Between Perdana Karya and Radiant Utama

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

By analyzing existing cross correlation between Perdana Karya Perkasa and Radiant Utama Interinsco, you can compare the effects of market volatilities on Perdana Karya and Radiant Utama 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 Perdana Karya with a short position of Radiant Utama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perdana Karya and Radiant Utama.

Diversification Opportunities for Perdana Karya and Radiant Utama

0.41

Correlation Coefficient

Perdana Karya  Radiant Utama

Very weak diversification

The 3 months correlation between Perdana and Radiant is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Perdana Karya Perkasa and Radiant Utama Interinsco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Utama Interinsco and Perdana Karya 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 Perdana Karya Perkasa are associated (or correlated) with Radiant Utama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Utama Interinsco has no effect on the direction of Perdana Karya i.e., Perdana Karya and Radiant Utama go up and down completely randomly.

Pair Corralation between Perdana Karya and Radiant Utama

Assuming the 90 days trading horizon Perdana Karya Perkasa is expected to generate 0.95 times more return on investment than Radiant Utama. However, Perdana Karya Perkasa is 1.05 times less risky than Radiant Utama. It trades about 0.09 of its potential returns per unit of risk. Radiant Utama Interinsco is currently generating about -0.01 per unit of risk. If you would invest  24,800  in Perdana Karya Perkasa on October 9, 2024 and sell it today you would earn a total of  52,200  from holding Perdana Karya Perkasa or generate 210.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Perdana Karya Perkasa  vs.  Radiant Utama Interinsco

Perdana Karya Perkasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perdana Karya Perkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Radiant Utama Interinsco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radiant Utama Interinsco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Perdana Karya and Radiant Utama

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

The idea behind Perdana Karya Perkasa and Radiant Utama Interinsco 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.