Correlation Between Pelita Samudera and Hartadinata Abadi

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

By analyzing existing cross correlation between Pelita Samudera Shipping and Hartadinata Abadi Tbk, you can compare the effects of market volatilities on Pelita Samudera and Hartadinata Abadi 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 Pelita Samudera with a short position of Hartadinata Abadi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pelita Samudera and Hartadinata Abadi.

Diversification Opportunities for Pelita Samudera and Hartadinata Abadi

-0.76

Correlation Coefficient

Pelita Samudera  Hartadinata Abadi

Pay attention - limited upside

The 3 months correlation between Pelita and Hartadinata is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pelita Samudera Shipping and Hartadinata Abadi Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartadinata Abadi Tbk and Pelita Samudera 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 Pelita Samudera Shipping are associated (or correlated) with Hartadinata Abadi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartadinata Abadi Tbk has no effect on the direction of Pelita Samudera i.e., Pelita Samudera and Hartadinata Abadi go up and down completely randomly.

Pair Corralation between Pelita Samudera and Hartadinata Abadi

Assuming the 90 days trading horizon Pelita Samudera Shipping is expected to under-perform the Hartadinata Abadi. But the stock apears to be less risky and, when comparing its historical volatility, Pelita Samudera Shipping is 3.97 times less risky than Hartadinata Abadi. The stock trades about -0.06 of its potential returns per unit of risk. The Hartadinata Abadi Tbk is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  33,000  in Hartadinata Abadi Tbk on December 25, 2024 and sell it today you would earn a total of  12,200  from holding Hartadinata Abadi Tbk or generate 36.97% return on investment over 90 days.

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

Pelita Samudera Shipping  vs.  Hartadinata Abadi Tbk

Pelita Samudera Shipping

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pelita Samudera Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pelita Samudera is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Hartadinata Abadi Tbk

Risk-Adjusted Performance

Good

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

Pair Trading with Pelita Samudera and Hartadinata Abadi

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

The idea behind Pelita Samudera Shipping and Hartadinata Abadi 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.