Correlation Between Putra Rajawali and Paramita Bangun

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

By analyzing existing cross correlation between Putra Rajawali Kencana and Paramita Bangun Sarana, you can compare the effects of market volatilities on Putra Rajawali and Paramita Bangun 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 Putra Rajawali with a short position of Paramita Bangun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putra Rajawali and Paramita Bangun.

Diversification Opportunities for Putra Rajawali and Paramita Bangun

0.11

Correlation Coefficient

Putra Rajawali  Paramita Bangun

Average diversification

The 3 months correlation between Putra and Paramita is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Putra Rajawali Kencana and Paramita Bangun Sarana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramita Bangun Sarana and Putra Rajawali 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 Putra Rajawali Kencana are associated (or correlated) with Paramita Bangun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramita Bangun Sarana has no effect on the direction of Putra Rajawali i.e., Putra Rajawali and Paramita Bangun go up and down completely randomly.

Pair Corralation between Putra Rajawali and Paramita Bangun

Assuming the 90 days trading horizon Putra Rajawali Kencana is expected to generate 2.2 times more return on investment than Paramita Bangun. However, Putra Rajawali is 2.2 times more volatile than Paramita Bangun Sarana. It trades about 0.03 of its potential returns per unit of risk. Paramita Bangun Sarana is currently generating about -0.01 per unit of risk. If you would invest  1,100  in Putra Rajawali Kencana on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Putra Rajawali Kencana or generate 0.0% return on investment over 90 days.

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

Putra Rajawali Kencana  vs.  Paramita Bangun Sarana

Putra Rajawali Kencana

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Putra Rajawali Kencana are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Putra Rajawali may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Paramita Bangun Sarana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paramita Bangun Sarana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Paramita Bangun 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 Putra Rajawali and Paramita Bangun

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

The idea behind Putra Rajawali Kencana and Paramita Bangun Sarana 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.