Correlation Between Putra Rajawali and Pt Pradiksi

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

Diversification Opportunities for Putra Rajawali and Pt Pradiksi

-0.09

Correlation Coefficient

Putra Rajawali  Pt Pradiksi

Good diversification

The 3 months correlation between Putra and PGUN is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Putra Rajawali Kencana and Pt Pradiksi Gunatama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pt Pradiksi Gunatama 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 Pt Pradiksi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pt Pradiksi Gunatama has no effect on the direction of Putra Rajawali i.e., Putra Rajawali and Pt Pradiksi go up and down completely randomly.

Pair Corralation between Putra Rajawali and Pt Pradiksi

Assuming the 90 days trading horizon Putra Rajawali is expected to generate 1.71 times less return on investment than Pt Pradiksi. But when comparing it to its historical volatility, Putra Rajawali Kencana is 1.35 times less risky than Pt Pradiksi. It trades about 0.05 of its potential returns per unit of risk. Pt Pradiksi Gunatama is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  42,400  in Pt Pradiksi Gunatama on December 21, 2024 and sell it today you would earn a total of  6,600  from holding Pt Pradiksi Gunatama or generate 15.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Putra Rajawali Kencana  vs.  Pt Pradiksi Gunatama

Putra Rajawali Kencana

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Putra Rajawali Kencana are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Putra Rajawali disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pt Pradiksi Gunatama

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pt Pradiksi Gunatama are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pt Pradiksi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Putra Rajawali and Pt Pradiksi

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

The idea behind Putra Rajawali Kencana and Pt Pradiksi Gunatama 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..