Correlation Between Perusahaan Perseroan and China BlueChemical

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

Diversification Opportunities for Perusahaan Perseroan and China BlueChemical

0.69

Correlation Coefficient

Perusahaan Perseroan  China BlueChemical

Poor diversification

The 3 months correlation between Perusahaan and China is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Perusahaan Perseroan i.e., Perusahaan Perseroan and China BlueChemical go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and China BlueChemical

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the China BlueChemical. But the stock apears to be less risky and, when comparing its historical volatility, Perusahaan Perseroan PT is 1.58 times less risky than China BlueChemical. The stock trades about -0.09 of its potential returns per unit of risk. The China BlueChemical is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  26.00  in China BlueChemical on December 30, 2024 and sell it today you would lose (3.00) from holding China BlueChemical or give up 11.54% of portfolio value over 90 days.

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

Perusahaan Perseroan PT  vs.  China BlueChemical

Perusahaan Perseroan

Risk-Adjusted Performance

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

China BlueChemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days China BlueChemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Perusahaan Perseroan and China BlueChemical

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

The idea behind Perusahaan Perseroan PT and China BlueChemical 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.