Correlation Between Rukun Raharja and Petrosea Tbk

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

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

Diversification Opportunities for Rukun Raharja and Petrosea Tbk

0.83

Correlation Coefficient

Rukun Raharja  Petrosea Tbk

Very poor diversification

The 3 months correlation between Rukun and Petrosea is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Rukun Raharja Tbk and Petrosea Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrosea Tbk and Rukun Raharja 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 Rukun Raharja Tbk are associated (or correlated) with Petrosea Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrosea Tbk has no effect on the direction of Rukun Raharja i.e., Rukun Raharja and Petrosea Tbk go up and down completely randomly.

Pair Corralation between Rukun Raharja and Petrosea Tbk

Assuming the 90 days trading horizon Rukun Raharja Tbk is expected to generate 1.31 times more return on investment than Petrosea Tbk. However, Rukun Raharja is 1.31 times more volatile than Petrosea Tbk. It trades about 0.27 of its potential returns per unit of risk. Petrosea Tbk is currently generating about 0.27 per unit of risk. If you would invest  120,500  in Rukun Raharja Tbk on September 14, 2024 and sell it today you would earn a total of  163,500  from holding Rukun Raharja Tbk or generate 135.68% return on investment over 90 days.

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

Rukun Raharja Tbk  vs.  Petrosea Tbk

Rukun Raharja Tbk

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rukun Raharja Tbk are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Rukun Raharja disclosed solid returns over the last few months and may actually be approaching a breakup point.

Petrosea Tbk

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Petrosea Tbk are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Petrosea Tbk disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rukun Raharja and Petrosea Tbk

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

The idea behind Rukun Raharja Tbk and Petrosea 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.