Correlation Between Rig Tenders and Perdana Karya

Can any of the company-specific risk be diversified away by investing in both Rig Tenders and Perdana Karya 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 Rig Tenders and Perdana Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Rig Tenders and Perdana Karya

-0.57

Correlation Coefficient

Rig Tenders  Perdana Karya

Excellent diversification

The 3 months correlation between Rig and Perdana is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Rig Tenders Tbk and Perdana Karya Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdana Karya Perkasa and Rig Tenders 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 Rig Tenders Tbk are associated (or correlated) with Perdana Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdana Karya Perkasa has no effect on the direction of Rig Tenders i.e., Rig Tenders and Perdana Karya go up and down completely randomly.

Pair Corralation between Rig Tenders and Perdana Karya

Assuming the 90 days trading horizon Rig Tenders Tbk is expected to generate 3.16 times more return on investment than Perdana Karya. However, Rig Tenders is 3.16 times more volatile than Perdana Karya Perkasa. It trades about 0.07 of its potential returns per unit of risk. Perdana Karya Perkasa is currently generating about -0.15 per unit of risk. If you would invest  60,500  in Rig Tenders Tbk on October 25, 2024 and sell it today you would earn a total of  9,500  from holding Rig Tenders Tbk or generate 15.7% return on investment over 90 days.

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

Rig Tenders Tbk  vs.  Perdana Karya Perkasa

Rig Tenders Tbk

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rig Tenders Tbk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Rig Tenders disclosed solid returns over the last few months and may actually be approaching a breakup point.

Perdana Karya Perkasa

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rig Tenders and Perdana Karya

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

The idea behind Rig Tenders Tbk and Perdana Karya Perkasa 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.