Correlation Between PT Utama and Armada Berjaya

Can any of the company-specific risk be diversified away by investing in both PT Utama and Armada Berjaya 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 PT Utama and Armada Berjaya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Utama Radar and Armada Berjaya Trans, you can compare the effects of market volatilities on PT Utama and Armada Berjaya 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 PT Utama with a short position of Armada Berjaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Utama and Armada Berjaya.

Diversification Opportunities for PT Utama and Armada Berjaya

0.09

Correlation Coefficient

PT Utama  Armada Berjaya

Significant diversification

The 3 months correlation between RCCC and Armada is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding PT Utama Radar and Armada Berjaya Trans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Berjaya Trans and PT Utama 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 PT Utama Radar are associated (or correlated) with Armada Berjaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Berjaya Trans has no effect on the direction of PT Utama i.e., PT Utama and Armada Berjaya go up and down completely randomly.

Pair Corralation between PT Utama and Armada Berjaya

Assuming the 90 days trading horizon PT Utama Radar is expected to under-perform the Armada Berjaya. In addition to that, PT Utama is 4.67 times more volatile than Armada Berjaya Trans. It trades about -0.28 of its total potential returns per unit of risk. Armada Berjaya Trans is currently generating about -0.04 per unit of volatility. If you would invest  9,300  in Armada Berjaya Trans on December 27, 2024 and sell it today you would lose (300.00) from holding Armada Berjaya Trans or give up 3.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

PT Utama Radar  vs.  Armada Berjaya Trans

PT Utama Radar

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Utama Radar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Armada Berjaya Trans

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Berjaya Trans has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Armada Berjaya 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 PT Utama and Armada Berjaya

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

The idea behind PT Utama Radar and Armada Berjaya Trans 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.