Correlation Between Rukun Raharja and Suparma Tbk

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

Diversification Opportunities for Rukun Raharja and Suparma Tbk

-0.59

Correlation Coefficient

Rukun Raharja  Suparma Tbk

Excellent diversification

The 3 months correlation between Rukun and Suparma is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Rukun Raharja Tbk and Suparma Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suparma 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 Suparma Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suparma Tbk has no effect on the direction of Rukun Raharja i.e., Rukun Raharja and Suparma Tbk go up and down completely randomly.

Pair Corralation between Rukun Raharja and Suparma Tbk

Assuming the 90 days trading horizon Rukun Raharja Tbk is expected to generate 3.89 times more return on investment than Suparma Tbk. However, Rukun Raharja is 3.89 times more volatile than Suparma Tbk. It trades about 0.14 of its potential returns per unit of risk. Suparma Tbk is currently generating about -0.11 per unit of risk. If you would invest  213,000  in Rukun Raharja Tbk on December 3, 2024 and sell it today you would earn a total of  97,000  from holding Rukun Raharja Tbk or generate 45.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Rukun Raharja Tbk  vs.  Suparma Tbk

Rukun Raharja Tbk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rukun Raharja Tbk are ranked lower than 11 (%) 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.

Suparma Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suparma Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Rukun Raharja and Suparma Tbk

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

The idea behind Rukun Raharja Tbk and Suparma 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.