Correlation Between Petrosea Tbk and Arwana Citramulia

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

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

Diversification Opportunities for Petrosea Tbk and Arwana Citramulia

0.13

Correlation Coefficient

Petrosea Tbk  Arwana Citramulia

Average diversification

The 3 months correlation between Petrosea and Arwana is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Petrosea Tbk and Arwana Citramulia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arwana Citramulia Tbk and Petrosea Tbk 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 Petrosea Tbk are associated (or correlated) with Arwana Citramulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arwana Citramulia Tbk has no effect on the direction of Petrosea Tbk i.e., Petrosea Tbk and Arwana Citramulia go up and down completely randomly.

Pair Corralation between Petrosea Tbk and Arwana Citramulia

Assuming the 90 days trading horizon Petrosea Tbk is expected to generate 2.01 times more return on investment than Arwana Citramulia. However, Petrosea Tbk is 2.01 times more volatile than Arwana Citramulia Tbk. It trades about 0.6 of its potential returns per unit of risk. Arwana Citramulia Tbk is currently generating about -0.17 per unit of risk. If you would invest  1,862,500  in Petrosea Tbk on September 27, 2024 and sell it today you would earn a total of  942,500  from holding Petrosea Tbk or generate 50.6% return on investment over 90 days.

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

Petrosea Tbk  vs.  Arwana Citramulia Tbk

Petrosea Tbk

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Petrosea Tbk are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Petrosea Tbk disclosed solid returns over the last few months and may actually be approaching a breakup point.

Arwana Citramulia Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arwana Citramulia Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Arwana Citramulia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Petrosea Tbk and Arwana Citramulia

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

The idea behind Petrosea Tbk and Arwana Citramulia 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.