Correlation Between Perdana Karya and PT Temas

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

Diversification Opportunities for Perdana Karya and PT Temas

-0.09

Correlation Coefficient

Perdana Karya  PT Temas

Good diversification

The 3 months correlation between Perdana and TMAS is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Perdana Karya Perkasa and PT Temas Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Temas Tbk 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 PT Temas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Temas Tbk has no effect on the direction of Perdana Karya i.e., Perdana Karya and PT Temas go up and down completely randomly.

Pair Corralation between Perdana Karya and PT Temas

Assuming the 90 days trading horizon Perdana Karya Perkasa is expected to generate 0.94 times more return on investment than PT Temas. However, Perdana Karya Perkasa is 1.06 times less risky than PT Temas. It trades about 0.09 of its potential returns per unit of risk. PT Temas Tbk is currently generating about -0.02 per unit of risk. If you would invest  77,000  in Perdana Karya Perkasa on December 22, 2024 and sell it today you would earn a total of  8,000  from holding Perdana Karya Perkasa or generate 10.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Perdana Karya Perkasa  vs.  PT Temas Tbk

Perdana Karya Perkasa

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perdana Karya Perkasa are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Perdana Karya may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PT Temas Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Temas Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Temas 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 Perdana Karya and PT Temas

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

The idea behind Perdana Karya Perkasa and PT Temas 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.