Correlation Between Puri Global and Rockfields Property

Can any of the company-specific risk be diversified away by investing in both Puri Global and Rockfields Property 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 Puri Global and Rockfields Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Puri Global Sukses and Rockfields Property Indonesia, you can compare the effects of market volatilities on Puri Global and Rockfields Property 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 Puri Global with a short position of Rockfields Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puri Global and Rockfields Property.

Diversification Opportunities for Puri Global and Rockfields Property

-0.31

Correlation Coefficient

Puri Global  Rockfields Property

Very good diversification

The 3 months correlation between Puri and Rockfields is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Puri Global Sukses and Rockfields Property Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfields Property and Puri Global 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 Puri Global Sukses are associated (or correlated) with Rockfields Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockfields Property has no effect on the direction of Puri Global i.e., Puri Global and Rockfields Property go up and down completely randomly.

Pair Corralation between Puri Global and Rockfields Property

Assuming the 90 days trading horizon Puri Global Sukses is expected to generate 31.3 times more return on investment than Rockfields Property. However, Puri Global is 31.3 times more volatile than Rockfields Property Indonesia. It trades about 0.25 of its potential returns per unit of risk. Rockfields Property Indonesia is currently generating about 0.24 per unit of risk. If you would invest  22,000  in Puri Global Sukses on October 12, 2024 and sell it today you would earn a total of  5,400  from holding Puri Global Sukses or generate 24.55% return on investment over 90 days.

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

Puri Global Sukses  vs.  Rockfields Property Indonesia

Puri Global Sukses

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Puri Global Sukses are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Puri Global disclosed solid returns over the last few months and may actually be approaching a breakup point.

Rockfields Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rockfields Property Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Rockfields Property 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 Puri Global and Rockfields Property

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

The idea behind Puri Global Sukses and Rockfields Property Indonesia 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.