Correlation Between Arita Prima and Rukun Raharja
Can any of the company-specific risk be diversified away by investing in both Arita Prima and Rukun Raharja 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 Arita Prima and Rukun Raharja into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arita Prima Indonesia and Rukun Raharja Tbk, you can compare the effects of market volatilities on Arita Prima and Rukun Raharja 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 Arita Prima with a short position of Rukun Raharja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arita Prima and Rukun Raharja.
Diversification Opportunities for Arita Prima and Rukun Raharja
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arita and Rukun is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Arita Prima Indonesia and Rukun Raharja Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rukun Raharja Tbk and Arita Prima 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 Arita Prima Indonesia are associated (or correlated) with Rukun Raharja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rukun Raharja Tbk has no effect on the direction of Arita Prima i.e., Arita Prima and Rukun Raharja go up and down completely randomly.
Pair Corralation between Arita Prima and Rukun Raharja
Assuming the 90 days trading horizon Arita Prima is expected to generate 14.43 times less return on investment than Rukun Raharja. But when comparing it to its historical volatility, Arita Prima Indonesia is 4.41 times less risky than Rukun Raharja. It trades about 0.08 of its potential returns per unit of risk. Rukun Raharja Tbk is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 125,000 in Rukun Raharja Tbk on August 28, 2024 and sell it today you would earn a total of 109,000 from holding Rukun Raharja Tbk or generate 87.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arita Prima Indonesia vs. Rukun Raharja Tbk
Performance |
| Timeline |
| Arita Prima Indonesia |
| Rukun Raharja Tbk |
Arita Prima and Rukun Raharja Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arita Prima and Rukun Raharja
The main advantage of trading using opposite Arita Prima and Rukun Raharja positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arita Prima position performs unexpectedly, Rukun Raharja 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 Rukun Raharja will offset losses from the drop in Rukun Raharja's long position.The idea behind Arita Prima Indonesia and Rukun Raharja Tbk 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.| Rukun Raharja vs. Nusantara Infrastructure Tbk | Rukun Raharja vs. Panin Financial Tbk | Rukun Raharja vs. Ramayana Lestari Sentosa | Rukun Raharja vs. Kawasan Industri Jababeka |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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