Correlation Between PT Global and Zeon
Can any of the company-specific risk be diversified away by investing in both PT Global and Zeon 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 Global and Zeon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Global Mediacom and Zeon Corporation, you can compare the effects of market volatilities on PT Global and Zeon 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 Global with a short position of Zeon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Global and Zeon.
Diversification Opportunities for PT Global and Zeon
Excellent diversification
The 3 months correlation between 06L and Zeon is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding PT Global Mediacom and Zeon Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeon and PT Global 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 Global Mediacom are associated (or correlated) with Zeon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeon has no effect on the direction of PT Global i.e., PT Global and Zeon go up and down completely randomly.
Pair Corralation between PT Global and Zeon
Assuming the 90 days trading horizon PT Global Mediacom is expected to generate 6.06 times more return on investment than Zeon. However, PT Global is 6.06 times more volatile than Zeon Corporation. It trades about 0.05 of its potential returns per unit of risk. Zeon Corporation is currently generating about 0.03 per unit of risk. If you would invest 0.90 in PT Global Mediacom on September 4, 2024 and sell it today you would lose (0.15) from holding PT Global Mediacom or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.42% |
| Values | Daily Returns |
PT Global Mediacom vs. Zeon Corp.
Performance |
| Timeline |
| PT Global Mediacom |
| Zeon |
PT Global and Zeon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Global and Zeon
The main advantage of trading using opposite PT Global and Zeon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Global position performs unexpectedly, Zeon 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 Zeon will offset losses from the drop in Zeon's long position.The idea behind PT Global Mediacom and Zeon Corporation 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.Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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