Correlation Between Perusahaan Perseroan and Waste Management

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

Diversification Opportunities for Perusahaan Perseroan and Waste Management

-0.32

Correlation Coefficient

Perusahaan Perseroan  Waste Management

Very good diversification

The 3 months correlation between Perusahaan and Waste is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Perusahaan Perseroan i.e., Perusahaan Perseroan and Waste Management go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and Waste Management

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the Waste Management. In addition to that, Perusahaan Perseroan is 2.07 times more volatile than Waste Management. It trades about -0.05 of its total potential returns per unit of risk. Waste Management is currently generating about 0.14 per unit of volatility. If you would invest  18,265  in Waste Management on November 20, 2024 and sell it today you would earn a total of  3,520  from holding Waste Management or generate 19.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.02%
Values	Daily Returns

Perusahaan Perseroan PT  vs.  Waste Management

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 nearly stable basic indicators, Perusahaan Perseroan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Waste Management

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Waste Management 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 Waste Management

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

The idea behind Perusahaan Perseroan PT and Waste Management 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 Commodity Directory module to find actively traded commodities issued by global exchanges.