Correlation Between Petrosea Tbk and Resource Alam
Can any of the company-specific risk be diversified away by investing in both Petrosea Tbk 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 Petrosea Tbk and Resource Alam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrosea Tbk and Resource Alam Indonesia, you can compare the effects of market volatilities on Petrosea Tbk 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 Petrosea Tbk with a short position of Resource Alam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrosea Tbk and Resource Alam.
Diversification Opportunities for Petrosea Tbk and Resource Alam
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Petrosea and Resource is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Petrosea Tbk 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 Petrosea Tbk 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 Petrosea Tbk 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 Petrosea Tbk i.e., Petrosea Tbk and Resource Alam go up and down completely randomly.
Pair Corralation between Petrosea Tbk and Resource Alam
Assuming the 90 days trading horizon Petrosea Tbk is expected to generate 1.99 times more return on investment than Resource Alam. However, Petrosea Tbk is 1.99 times more volatile than Resource Alam Indonesia. It trades about 0.34 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 70,750 in Petrosea Tbk on November 3, 2024 and sell it today you would earn a total of 327,250 from holding Petrosea Tbk or generate 462.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrosea Tbk vs. Resource Alam Indonesia
Performance |
| Timeline |
| Petrosea Tbk |
| Resource Alam Indonesia |
Petrosea Tbk and Resource Alam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrosea Tbk and Resource Alam
The main advantage of trading using opposite Petrosea Tbk and Resource Alam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrosea Tbk 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.| Petrosea Tbk vs. Indika Energy Tbk | Petrosea Tbk vs. Harum Energy Tbk | Petrosea Tbk vs. Indo Tambangraya Megah | Petrosea Tbk vs. Gajah Tunggal Tbk |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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