Correlation Between Hexindo Adiperkasa and Royal Prima
Can any of the company-specific risk be diversified away by investing in both Hexindo Adiperkasa and Royal Prima 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 Hexindo Adiperkasa and Royal Prima into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexindo Adiperkasa Tbk and Royal Prima PT, you can compare the effects of market volatilities on Hexindo Adiperkasa and Royal Prima 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 Hexindo Adiperkasa with a short position of Royal Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexindo Adiperkasa and Royal Prima.
Diversification Opportunities for Hexindo Adiperkasa and Royal Prima
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hexindo and Royal is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hexindo Adiperkasa Tbk and Royal Prima PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Prima PT and Hexindo Adiperkasa 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 Hexindo Adiperkasa Tbk are associated (or correlated) with Royal Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Prima PT has no effect on the direction of Hexindo Adiperkasa i.e., Hexindo Adiperkasa and Royal Prima go up and down completely randomly.
Pair Corralation between Hexindo Adiperkasa and Royal Prima
Assuming the 90 days trading horizon Hexindo Adiperkasa Tbk is expected to generate 0.3 times more return on investment than Royal Prima. However, Hexindo Adiperkasa Tbk is 3.29 times less risky than Royal Prima. It trades about 0.01 of its potential returns per unit of risk. Royal Prima PT is currently generating about -0.04 per unit of risk. If you would invest 477,373 in Hexindo Adiperkasa Tbk on August 28, 2024 and sell it today you would earn a total of 7,627 from holding Hexindo Adiperkasa Tbk or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Hexindo Adiperkasa Tbk vs. Royal Prima PT
Performance |
| Timeline |
| Hexindo Adiperkasa Tbk |
| Royal Prima PT |
Hexindo Adiperkasa and Royal Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexindo Adiperkasa and Royal Prima
The main advantage of trading using opposite Hexindo Adiperkasa and Royal Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexindo Adiperkasa position performs unexpectedly, Royal Prima 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 Royal Prima will offset losses from the drop in Royal Prima's long position.The idea behind Hexindo Adiperkasa Tbk and Royal Prima PT 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.| Royal Prima vs. Astra Graphia Tbk | Royal Prima vs. Hexindo Adiperkasa Tbk | Royal Prima vs. Lautan Luas Tbk | Royal Prima vs. Citra Marga Nusaphala |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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