Correlation Between Putra Rajawali and Terregra Asia

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

Diversification Opportunities for Putra Rajawali and Terregra Asia

0.53

Correlation Coefficient

Putra Rajawali  Terregra Asia

Very weak diversification

The 3 months correlation between Putra and Terregra is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Putra Rajawali Kencana and Terregra Asia Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terregra Asia Energy 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 Terregra Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terregra Asia Energy has no effect on the direction of Putra Rajawali i.e., Putra Rajawali and Terregra Asia go up and down completely randomly.

Pair Corralation between Putra Rajawali and Terregra Asia

Assuming the 90 days trading horizon Putra Rajawali is expected to generate 4.0 times less return on investment than Terregra Asia. In addition to that, Putra Rajawali is 1.16 times more volatile than Terregra Asia Energy. It trades about 0.03 of its total potential returns per unit of risk. Terregra Asia Energy is currently generating about 0.13 per unit of volatility. If you would invest  2,600  in Terregra Asia Energy on December 23, 2024 and sell it today you would earn a total of  900.00  from holding Terregra Asia Energy or generate 34.62% return on investment over 90 days.

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

Putra Rajawali Kencana  vs.  Terregra Asia Energy

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.

Terregra Asia Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Terregra Asia Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Terregra Asia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Putra Rajawali and Terregra Asia

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

The idea behind Putra Rajawali Kencana and Terregra Asia Energy 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.