Correlation Between Red Planet and Pioneerindo Gourmet

Can any of the company-specific risk be diversified away by investing in both Red Planet and Pioneerindo Gourmet 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 Red Planet and Pioneerindo Gourmet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Red Planet Indonesia and Pioneerindo Gourmet International, you can compare the effects of market volatilities on Red Planet and Pioneerindo Gourmet 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 Red Planet with a short position of Pioneerindo Gourmet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Planet and Pioneerindo Gourmet.

Diversification Opportunities for Red Planet and Pioneerindo Gourmet

-0.24

Correlation Coefficient

Red Planet  Pioneerindo Gourmet

Very good diversification

The 3 months correlation between Red and Pioneerindo is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Red Planet Indonesia and Pioneerindo Gourmet Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneerindo Gourmet and Red Planet 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 Red Planet Indonesia are associated (or correlated) with Pioneerindo Gourmet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneerindo Gourmet has no effect on the direction of Red Planet i.e., Red Planet and Pioneerindo Gourmet go up and down completely randomly.

Pair Corralation between Red Planet and Pioneerindo Gourmet

Assuming the 90 days trading horizon Red Planet Indonesia is expected to generate 1.27 times more return on investment than Pioneerindo Gourmet. However, Red Planet is 1.27 times more volatile than Pioneerindo Gourmet International. It trades about 0.15 of its potential returns per unit of risk. Pioneerindo Gourmet International is currently generating about -0.16 per unit of risk. If you would invest  2,300  in Red Planet Indonesia on September 5, 2024 and sell it today you would earn a total of  900.00  from holding Red Planet Indonesia or generate 39.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Red Planet Indonesia  vs.  Pioneerindo Gourmet Internatio

Red Planet Indonesia

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Red Planet Indonesia are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Red Planet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pioneerindo Gourmet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pioneerindo Gourmet International 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 Red Planet and Pioneerindo Gourmet

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

The idea behind Red Planet Indonesia and Pioneerindo Gourmet International 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 CEOs Directory module to screen CEOs from public companies around the world.