Correlation Between Petrosea Tbk and Rig Tenders

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

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

Diversification Opportunities for Petrosea Tbk and Rig Tenders

-0.26

Correlation Coefficient

Petrosea Tbk  Rig Tenders

Very good diversification

The 3 months correlation between Petrosea and Rig is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Petrosea Tbk and Rig Tenders Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rig Tenders 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 Rig Tenders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rig Tenders Tbk has no effect on the direction of Petrosea Tbk i.e., Petrosea Tbk and Rig Tenders go up and down completely randomly.

Pair Corralation between Petrosea Tbk and Rig Tenders

Assuming the 90 days trading horizon Petrosea Tbk is expected to generate 1.54 times more return on investment than Rig Tenders. However, Petrosea Tbk is 1.54 times more volatile than Rig Tenders Tbk. It trades about 0.0 of its potential returns per unit of risk. Rig Tenders Tbk is currently generating about -0.1 per unit of risk. If you would invest  283,000  in Petrosea Tbk on December 27, 2024 and sell it today you would lose (40,000) from holding Petrosea Tbk or give up 14.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Petrosea Tbk  vs.  Rig Tenders Tbk

Petrosea Tbk

Risk-Adjusted Performance

Very Weak

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

Rig Tenders Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rig Tenders Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Petrosea Tbk and Rig Tenders

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

The idea behind Petrosea Tbk and Rig Tenders 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.