Correlation Between Perdana Karya and Samindo Resources
Can any of the company-specific risk be diversified away by investing in both Perdana Karya and Samindo Resources 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 Samindo Resources 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 Samindo Resources Tbk, you can compare the effects of market volatilities on Perdana Karya and Samindo Resources 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 Samindo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perdana Karya and Samindo Resources.
Diversification Opportunities for Perdana Karya and Samindo Resources
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Perdana and Samindo is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Perdana Karya Perkasa and Samindo Resources Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samindo Resources Tbk 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 Samindo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samindo Resources Tbk has no effect on the direction of Perdana Karya i.e., Perdana Karya and Samindo Resources go up and down completely randomly.
Pair Corralation between Perdana Karya and Samindo Resources
Assuming the 90 days trading horizon Perdana Karya Perkasa is expected to under-perform the Samindo Resources. But the stock apears to be less risky and, when comparing its historical volatility, Perdana Karya Perkasa is 1.9 times less risky than Samindo Resources. The stock trades about -0.13 of its potential returns per unit of risk. The Samindo Resources Tbk is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 131,000 in Samindo Resources Tbk on August 28, 2024 and sell it today you would earn a total of 29,000 from holding Samindo Resources Tbk or generate 22.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perdana Karya Perkasa vs. Samindo Resources Tbk
Performance |
| Timeline |
| Perdana Karya Perkasa |
| Samindo Resources Tbk |
Perdana Karya and Samindo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perdana Karya and Samindo Resources
The main advantage of trading using opposite Perdana Karya and Samindo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perdana Karya position performs unexpectedly, Samindo Resources 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 Samindo Resources will offset losses from the drop in Samindo Resources' long position.The idea behind Perdana Karya Perkasa and Samindo Resources 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.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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