Correlation Between Rayonier Advanced and PT Hexindo

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

By analyzing existing cross correlation between Rayonier Advanced Materials and PT Hexindo Adiperkasa, you can compare the effects of market volatilities on Rayonier Advanced and PT Hexindo 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 Rayonier Advanced with a short position of PT Hexindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rayonier Advanced and PT Hexindo.

Diversification Opportunities for Rayonier Advanced and PT Hexindo

-0.37

Correlation Coefficient

Rayonier Advanced  PT Hexindo

Very good diversification

The 3 months correlation between Rayonier and HX1A is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier Advanced Materials and PT Hexindo Adiperkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Hexindo Adiperkasa and Rayonier Advanced 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 Rayonier Advanced Materials are associated (or correlated) with PT Hexindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Hexindo Adiperkasa has no effect on the direction of Rayonier Advanced i.e., Rayonier Advanced and PT Hexindo go up and down completely randomly.

Pair Corralation between Rayonier Advanced and PT Hexindo

Assuming the 90 days horizon Rayonier Advanced is expected to generate 732.65 times less return on investment than PT Hexindo. But when comparing it to its historical volatility, Rayonier Advanced Materials is 2.03 times less risky than PT Hexindo. It trades about 0.0 of its potential returns per unit of risk. PT Hexindo Adiperkasa is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  28.00  in PT Hexindo Adiperkasa on October 14, 2024 and sell it today you would earn a total of  6.00  from holding PT Hexindo Adiperkasa or generate 21.43% return on investment over 90 days.

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

Rayonier Advanced Materials  vs.  PT Hexindo Adiperkasa

Rayonier Advanced

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rayonier Advanced Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Rayonier Advanced is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PT Hexindo Adiperkasa

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Hexindo Adiperkasa are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Hexindo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rayonier Advanced and PT Hexindo

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

The idea behind Rayonier Advanced Materials and PT Hexindo Adiperkasa 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.