Correlation Between Kencana Energi and Paramita Bangun
Can any of the company-specific risk be diversified away by investing in both Kencana Energi and Paramita Bangun 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 Kencana Energi and Paramita Bangun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kencana Energi Lestari and Paramita Bangun Sarana, you can compare the effects of market volatilities on Kencana Energi and Paramita Bangun 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 Kencana Energi with a short position of Paramita Bangun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kencana Energi and Paramita Bangun.
Diversification Opportunities for Kencana Energi and Paramita Bangun
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kencana and Paramita is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Kencana Energi Lestari and Paramita Bangun Sarana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramita Bangun Sarana and Kencana Energi 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 Kencana Energi Lestari are associated (or correlated) with Paramita Bangun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramita Bangun Sarana has no effect on the direction of Kencana Energi i.e., Kencana Energi and Paramita Bangun go up and down completely randomly.
Pair Corralation between Kencana Energi and Paramita Bangun
Assuming the 90 days trading horizon Kencana Energi Lestari is expected to under-perform the Paramita Bangun. In addition to that, Kencana Energi is 1.31 times more volatile than Paramita Bangun Sarana. It trades about -0.02 of its total potential returns per unit of risk. Paramita Bangun Sarana is currently generating about 0.09 per unit of volatility. If you would invest 26,678 in Paramita Bangun Sarana on September 2, 2024 and sell it today you would earn a total of 7,122 from holding Paramita Bangun Sarana or generate 26.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kencana Energi Lestari vs. Paramita Bangun Sarana
Performance |
| Timeline |
| Kencana Energi Lestari |
| Paramita Bangun Sarana |
Kencana Energi and Paramita Bangun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kencana Energi and Paramita Bangun
The main advantage of trading using opposite Kencana Energi and Paramita Bangun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kencana Energi position performs unexpectedly, Paramita Bangun 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 Paramita Bangun will offset losses from the drop in Paramita Bangun's long position.| Kencana Energi vs. PT Indonesia Kendaraan | Kencana Energi vs. Cikarang Listrindo Tbk | Kencana Energi vs. Jasa Armada Indonesia | Kencana Energi vs. Pelita Samudera Shipping |
| Paramita Bangun vs. Nusa Raya Cipta | Paramita Bangun vs. Indonesia Pondasi Raya | Paramita Bangun vs. Pelayaran Nelly Dwi | Paramita Bangun vs. PP Presisi Tbk |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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