Correlation Between Petrosea Tbk and Perdana Karya
Can any of the company-specific risk be diversified away by investing in both Petrosea Tbk and Perdana Karya 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 Perdana Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrosea Tbk and Perdana Karya Perkasa, you can compare the effects of market volatilities on Petrosea Tbk and Perdana Karya 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 Perdana Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrosea Tbk and Perdana Karya.
Diversification Opportunities for Petrosea Tbk and Perdana Karya
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petrosea and Perdana is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Petrosea Tbk and Perdana Karya Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdana Karya Perkasa 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 Perdana Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdana Karya Perkasa has no effect on the direction of Petrosea Tbk i.e., Petrosea Tbk and Perdana Karya go up and down completely randomly.
Pair Corralation between Petrosea Tbk and Perdana Karya
Assuming the 90 days trading horizon Petrosea Tbk is expected to generate 2.02 times more return on investment than Perdana Karya. However, Petrosea Tbk is 2.02 times more volatile than Perdana Karya Perkasa. It trades about 0.25 of its potential returns per unit of risk. Perdana Karya Perkasa is currently generating about -0.13 per unit of risk. If you would invest 1,630,000 in Petrosea Tbk on August 28, 2024 and sell it today you would earn a total of 272,500 from holding Petrosea Tbk or generate 16.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrosea Tbk vs. Perdana Karya Perkasa
Performance |
| Timeline |
| Petrosea Tbk |
| Perdana Karya Perkasa |
Petrosea Tbk and Perdana Karya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrosea Tbk and Perdana Karya
The main advantage of trading using opposite Petrosea Tbk and Perdana Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrosea Tbk position performs unexpectedly, Perdana Karya 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 Perdana Karya will offset losses from the drop in Perdana Karya's long position.| Petrosea Tbk vs. Kedaung Indah Can | Petrosea Tbk vs. Langgeng Makmur Industri | Petrosea Tbk vs. Kabelindo Murni Tbk | Petrosea Tbk vs. Mustika Ratu 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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