Correlation Between Algonquin Power and PT Gajah
Can any of the company-specific risk be diversified away by investing in both Algonquin Power and PT Gajah 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 Algonquin Power and PT Gajah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algonquin Power Utilities and PT Gajah Tunggal, you can compare the effects of market volatilities on Algonquin Power and PT Gajah 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 Algonquin Power with a short position of PT Gajah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and PT Gajah.
Diversification Opportunities for Algonquin Power and PT Gajah
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Algonquin and GH8 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and PT Gajah Tunggal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Gajah Tunggal and Algonquin Power 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 Algonquin Power Utilities are associated (or correlated) with PT Gajah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Gajah Tunggal has no effect on the direction of Algonquin Power i.e., Algonquin Power and PT Gajah go up and down completely randomly.
Pair Corralation between Algonquin Power and PT Gajah
Assuming the 90 days horizon Algonquin Power Utilities is expected to generate 0.3 times more return on investment than PT Gajah. However, Algonquin Power Utilities is 3.37 times less risky than PT Gajah. It trades about 0.13 of its potential returns per unit of risk. PT Gajah Tunggal is currently generating about -0.09 per unit of risk. If you would invest 412.00 in Algonquin Power Utilities on October 21, 2024 and sell it today you would earn a total of 14.00 from holding Algonquin Power Utilities or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. PT Gajah Tunggal
Performance |
| Timeline |
| Algonquin Power Utilities |
| PT Gajah Tunggal |
Algonquin Power and PT Gajah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and PT Gajah
The main advantage of trading using opposite Algonquin Power and PT Gajah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power position performs unexpectedly, PT Gajah 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 Gajah will offset losses from the drop in PT Gajah's long position.| Algonquin Power vs. United Rentals | Algonquin Power vs. Lendlease Group | Algonquin Power vs. UNITED RENTALS | Algonquin Power vs. Lery Seafood Group |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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