Correlation Between Radiant Utama and Asia Pacific

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

By analyzing existing cross correlation between Radiant Utama Interinsco and Asia Pacific Fibers, you can compare the effects of market volatilities on Radiant Utama and Asia Pacific 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 Radiant Utama with a short position of Asia Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radiant Utama and Asia Pacific.

Diversification Opportunities for Radiant Utama and Asia Pacific

0.28

Correlation Coefficient

Radiant Utama  Asia Pacific

Modest diversification

The 3 months correlation between Radiant and Asia is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Utama Interinsco and Asia Pacific Fibers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Fibers and Radiant 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 Radiant Utama Interinsco are associated (or correlated) with Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Fibers has no effect on the direction of Radiant Utama i.e., Radiant Utama and Asia Pacific go up and down completely randomly.

Pair Corralation between Radiant Utama and Asia Pacific

Assuming the 90 days trading horizon Radiant Utama Interinsco is expected to generate 0.29 times more return on investment than Asia Pacific. However, Radiant Utama Interinsco is 3.42 times less risky than Asia Pacific. It trades about -0.05 of its potential returns per unit of risk. Asia Pacific Fibers is currently generating about -0.06 per unit of risk. If you would invest  19,300  in Radiant Utama Interinsco on October 22, 2024 and sell it today you would lose (2,900) from holding Radiant Utama Interinsco or give up 15.03% of portfolio value over 90 days.

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

Radiant Utama Interinsco  vs.  Asia Pacific Fibers

Radiant Utama Interinsco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radiant Utama Interinsco 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.

Asia Pacific Fibers

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pacific Fibers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Asia Pacific 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 Radiant Utama and Asia Pacific

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

The idea behind Radiant Utama Interinsco and Asia Pacific Fibers 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.