Correlation Between Perdana Karya and Resource Alam
Can any of the company-specific risk be diversified away by investing in both Perdana Karya and Resource Alam 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 Perdana Karya and Resource Alam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perdana Karya Perkasa and Resource Alam Indonesia, you can compare the effects of market volatilities on Perdana Karya and Resource Alam 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 Perdana Karya with a short position of Resource Alam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perdana Karya and Resource Alam.
Diversification Opportunities for Perdana Karya and Resource Alam
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Perdana and Resource is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Perdana Karya Perkasa and Resource Alam Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Alam Indonesia and Perdana Karya 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 Perdana Karya Perkasa are associated (or correlated) with Resource Alam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Alam Indonesia has no effect on the direction of Perdana Karya i.e., Perdana Karya and Resource Alam go up and down completely randomly.
Pair Corralation between Perdana Karya and Resource Alam
Assuming the 90 days trading horizon Perdana Karya Perkasa is expected to generate 2.42 times more return on investment than Resource Alam. However, Perdana Karya is 2.42 times more volatile than Resource Alam Indonesia. It trades about 0.14 of its potential returns per unit of risk. Resource Alam Indonesia is currently generating about -0.04 per unit of risk. If you would invest 33,600 in Perdana Karya Perkasa on November 3, 2024 and sell it today you would earn a total of 38,400 from holding Perdana Karya Perkasa or generate 114.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perdana Karya Perkasa vs. Resource Alam Indonesia
Performance |
| Timeline |
| Perdana Karya Perkasa |
| Resource Alam Indonesia |
Perdana Karya and Resource Alam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perdana Karya and Resource Alam
The main advantage of trading using opposite Perdana Karya and Resource Alam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perdana Karya position performs unexpectedly, Resource Alam 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 Resource Alam will offset losses from the drop in Resource Alam's long position.| Perdana Karya vs. Radiant Utama Interinsco | Perdana Karya vs. Resource Alam Indonesia | Perdana Karya vs. Exploitasi Energi Indonesia | Perdana Karya vs. Asia Pacific Fibers |
| Resource Alam vs. Petrosea Tbk | Resource Alam vs. Harum Energy Tbk | Resource Alam vs. Perdana Karya Perkasa | Resource Alam vs. Bayan Resources 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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