Correlation Between Pt Pakuan and Rockfields Property

Can any of the company-specific risk be diversified away by investing in both Pt Pakuan and Rockfields Property 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 Pt Pakuan and Rockfields Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pt Pakuan Tbk and Rockfields Property Indonesia, you can compare the effects of market volatilities on Pt Pakuan and Rockfields Property 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 Pt Pakuan with a short position of Rockfields Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pt Pakuan and Rockfields Property.

Diversification Opportunities for Pt Pakuan and Rockfields Property

0.8

Correlation Coefficient

Pt Pakuan  Rockfields Property

Very poor diversification

The 3 months correlation between UANG and Rockfields is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pt Pakuan Tbk and Rockfields Property Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfields Property and Pt Pakuan 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 Pt Pakuan Tbk are associated (or correlated) with Rockfields Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockfields Property has no effect on the direction of Pt Pakuan i.e., Pt Pakuan and Rockfields Property go up and down completely randomly.

Pair Corralation between Pt Pakuan and Rockfields Property

Assuming the 90 days trading horizon Pt Pakuan Tbk is expected to generate 5.94 times more return on investment than Rockfields Property. However, Pt Pakuan is 5.94 times more volatile than Rockfields Property Indonesia. It trades about 0.06 of its potential returns per unit of risk. Rockfields Property Indonesia is currently generating about -0.15 per unit of risk. If you would invest  54,579  in Pt Pakuan Tbk on October 12, 2024 and sell it today you would earn a total of  18,921  from holding Pt Pakuan Tbk or generate 34.67% return on investment over 90 days.

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

Pt Pakuan Tbk  vs.  Rockfields Property Indonesia

Pt Pakuan Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pt Pakuan Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pt Pakuan is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Rockfields Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rockfields Property Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Rockfields Property 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 Pt Pakuan and Rockfields Property

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

The idea behind Pt Pakuan Tbk and Rockfields Property Indonesia 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.