Correlation Between Asia Pacific and Pudjiadi Sons

Can any of the company-specific risk be diversified away by investing in both Asia Pacific and Pudjiadi Sons 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 Asia Pacific and Pudjiadi Sons into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Pacific Fibers and Pudjiadi Sons Tbk, you can compare the effects of market volatilities on Asia Pacific and Pudjiadi Sons 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 Asia Pacific with a short position of Pudjiadi Sons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Pacific and Pudjiadi Sons.

Diversification Opportunities for Asia Pacific and Pudjiadi Sons

-0.2

Correlation Coefficient

Asia Pacific  Pudjiadi Sons

Good diversification

The 3 months correlation between Asia and Pudjiadi is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Asia Pacific Fibers and Pudjiadi Sons Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pudjiadi Sons Tbk and Asia Pacific 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 Asia Pacific Fibers are associated (or correlated) with Pudjiadi Sons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pudjiadi Sons Tbk has no effect on the direction of Asia Pacific i.e., Asia Pacific and Pudjiadi Sons go up and down completely randomly.

Pair Corralation between Asia Pacific and Pudjiadi Sons

Assuming the 90 days trading horizon Asia Pacific Fibers is expected to generate 0.85 times more return on investment than Pudjiadi Sons. However, Asia Pacific Fibers is 1.18 times less risky than Pudjiadi Sons. It trades about 0.1 of its potential returns per unit of risk. Pudjiadi Sons Tbk is currently generating about -0.44 per unit of risk. If you would invest  2,000  in Asia Pacific Fibers on October 24, 2024 and sell it today you would earn a total of  100.00  from holding Asia Pacific Fibers or generate 5.0% return on investment over 90 days.

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

Asia Pacific Fibers  vs.  Pudjiadi Sons Tbk

Asia Pacific Fibers

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pacific Fibers are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Asia Pacific may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pudjiadi Sons Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pudjiadi Sons Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pudjiadi Sons disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asia Pacific and Pudjiadi Sons

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

The idea behind Asia Pacific Fibers and Pudjiadi Sons 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.