Correlation Between Perusahaan Perseroan and Chevron

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

By analyzing existing cross correlation between Perusahaan Perseroan PT and Chevron, you can compare the effects of market volatilities on Perusahaan Perseroan and Chevron 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 Perusahaan Perseroan with a short position of Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perusahaan Perseroan and Chevron.

Diversification Opportunities for Perusahaan Perseroan and Chevron

-0.54

Correlation Coefficient

Perusahaan Perseroan  Chevron

Excellent diversification

The 3 months correlation between Perusahaan and Chevron is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron and Perusahaan Perseroan 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 Perusahaan Perseroan PT are associated (or correlated) with Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Perusahaan Perseroan i.e., Perusahaan Perseroan and Chevron go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and Chevron

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the Chevron. In addition to that, Perusahaan Perseroan is 2.05 times more volatile than Chevron. It trades about -0.02 of its total potential returns per unit of risk. Chevron is currently generating about 0.06 per unit of volatility. If you would invest  13,683  in Chevron on October 5, 2024 and sell it today you would earn a total of  615.00  from holding Chevron or generate 4.49% return on investment over 90 days.

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

Perusahaan Perseroan PT  vs.  Chevron

Perusahaan Perseroan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perusahaan Perseroan PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Perusahaan Perseroan is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Chevron

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Chevron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Chevron is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Perusahaan Perseroan and Chevron

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

The idea behind Perusahaan Perseroan PT and Chevron 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.