Correlation Between Perusahaan Gas and Kapuas Prima
Can any of the company-specific risk be diversified away by investing in both Perusahaan Gas and Kapuas 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 Perusahaan Gas and Kapuas Prima into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perusahaan Gas Negara and Kapuas Prima Coal, you can compare the effects of market volatilities on Perusahaan Gas and Kapuas 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 Perusahaan Gas with a short position of Kapuas Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perusahaan Gas and Kapuas Prima.
Diversification Opportunities for Perusahaan Gas and Kapuas Prima
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Perusahaan and Kapuas is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Gas Negara and Kapuas Prima Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kapuas Prima Coal and Perusahaan Gas 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 Perusahaan Gas Negara are associated (or correlated) with Kapuas Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kapuas Prima Coal has no effect on the direction of Perusahaan Gas i.e., Perusahaan Gas and Kapuas Prima go up and down completely randomly.
Pair Corralation between Perusahaan Gas and Kapuas Prima
Assuming the 90 days trading horizon Perusahaan Gas Negara is expected to generate 0.61 times more return on investment than Kapuas Prima. However, Perusahaan Gas Negara is 1.65 times less risky than Kapuas Prima. It trades about 0.06 of its potential returns per unit of risk. Kapuas Prima Coal is currently generating about -0.16 per unit of risk. If you would invest 150,500 in Perusahaan Gas Negara on August 31, 2024 and sell it today you would earn a total of 3,500 from holding Perusahaan Gas Negara or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perusahaan Gas Negara vs. Kapuas Prima Coal
Performance |
| Timeline |
| Perusahaan Gas Negara |
| Kapuas Prima Coal |
Perusahaan Gas and Kapuas Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perusahaan Gas and Kapuas Prima
The main advantage of trading using opposite Perusahaan Gas and Kapuas Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perusahaan Gas position performs unexpectedly, Kapuas 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 Kapuas Prima will offset losses from the drop in Kapuas Prima's long position.| Perusahaan Gas vs. Aneka Tambang Persero | Perusahaan Gas vs. Bukit Asam Tbk | Perusahaan Gas vs. Telkom Indonesia Tbk | Perusahaan Gas vs. Astra International Tbk |
| Kapuas Prima vs. Perusahaan Gas Negara | Kapuas Prima vs. Vale Indonesia Tbk | Kapuas Prima vs. Telkom Indonesia Tbk | Kapuas Prima vs. Mitra Pinasthika Mustika |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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