Correlation Between Chandra Asri and PT Pelayaran

Can any of the company-specific risk be diversified away by investing in both Chandra Asri and PT Pelayaran 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 Pelayaran 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 Pelayaran Tamarin, you can compare the effects of market volatilities on Chandra Asri and PT Pelayaran 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 Pelayaran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chandra Asri and PT Pelayaran.

Diversification Opportunities for Chandra Asri and PT Pelayaran

0.42

Correlation Coefficient

Chandra Asri  PT Pelayaran

Very weak diversification

The 3 months correlation between Chandra and TAMU is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chandra Asri Petrochemical and PT Pelayaran Tamarin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Pelayaran Tamarin 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 Pelayaran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Pelayaran Tamarin has no effect on the direction of Chandra Asri i.e., Chandra Asri and PT Pelayaran go up and down completely randomly.

Pair Corralation between Chandra Asri and PT Pelayaran

Assuming the 90 days trading horizon Chandra Asri Petrochemical is expected to under-perform the PT Pelayaran. But the stock apears to be less risky and, when comparing its historical volatility, Chandra Asri Petrochemical is 1.34 times less risky than PT Pelayaran. The stock trades about -0.08 of its potential returns per unit of risk. The PT Pelayaran Tamarin is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,600  in PT Pelayaran Tamarin on October 26, 2024 and sell it today you would lose (200.00) from holding PT Pelayaran Tamarin or give up 12.5% of portfolio value over 90 days.

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

Chandra Asri Petrochemical  vs.  PT Pelayaran Tamarin

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PT Pelayaran Tamarin

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Chandra Asri Petrochemical and PT Pelayaran Tamarin 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.