Correlation Between Chandra Asri and PT Data

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

By analyzing existing cross correlation between Chandra Asri Petrochemical and PT Data Sinergitama, you can compare the effects of market volatilities on Chandra Asri and PT Data 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 Chandra Asri with a short position of PT Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chandra Asri and PT Data.

Diversification Opportunities for Chandra Asri and PT Data

-0.27

Correlation Coefficient

Chandra Asri  PT Data

Very good diversification

The 3 months correlation between Chandra and ELIT is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Chandra Asri Petrochemical and PT Data Sinergitama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Data Sinergitama and Chandra Asri 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 Chandra Asri Petrochemical are associated (or correlated) with PT Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Data Sinergitama has no effect on the direction of Chandra Asri i.e., Chandra Asri and PT Data go up and down completely randomly.

Pair Corralation between Chandra Asri and PT Data

Assuming the 90 days trading horizon Chandra Asri Petrochemical is expected to under-perform the PT Data. In addition to that, Chandra Asri is 1.26 times more volatile than PT Data Sinergitama. It trades about -0.13 of its total potential returns per unit of risk. PT Data Sinergitama is currently generating about 0.02 per unit of volatility. If you would invest  11,100  in PT Data Sinergitama on September 2, 2024 and sell it today you would earn a total of  100.00  from holding PT Data Sinergitama or generate 0.9% return on investment over 90 days.

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

Chandra Asri Petrochemical  vs.  PT Data Sinergitama

Chandra Asri Petroch

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chandra Asri Petrochemical 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PT Data Sinergitama

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Data Sinergitama are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, PT Data 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 Chandra Asri and PT Data

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

The idea behind Chandra Asri Petrochemical and PT Data Sinergitama 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.