Correlation Between Petrosea Tbk and Pudjiadi Sons
Can any of the company-specific risk be diversified away by investing in both Petrosea Tbk and Pudjiadi Sons 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 Pudjiadi Sons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrosea Tbk and Pudjiadi Sons Tbk, you can compare the effects of market volatilities on Petrosea Tbk and Pudjiadi Sons 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 Pudjiadi Sons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrosea Tbk and Pudjiadi Sons.
Diversification Opportunities for Petrosea Tbk and Pudjiadi Sons
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petrosea and Pudjiadi is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Petrosea Tbk and Pudjiadi Sons Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pudjiadi Sons Tbk 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 Pudjiadi Sons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pudjiadi Sons Tbk has no effect on the direction of Petrosea Tbk i.e., Petrosea Tbk and Pudjiadi Sons go up and down completely randomly.
Pair Corralation between Petrosea Tbk and Pudjiadi Sons
Assuming the 90 days trading horizon Petrosea Tbk is expected to generate 11.35 times less return on investment than Pudjiadi Sons. But when comparing it to its historical volatility, Petrosea Tbk is 4.18 times less risky than Pudjiadi Sons. It trades about 0.17 of its potential returns per unit of risk. Pudjiadi Sons Tbk is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 45,400 in Pudjiadi Sons Tbk on August 30, 2024 and sell it today you would earn a total of 90,600 from holding Pudjiadi Sons Tbk or generate 199.56% 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. Pudjiadi Sons Tbk
Performance |
| Timeline |
| Petrosea Tbk |
| Pudjiadi Sons Tbk |
Petrosea Tbk and Pudjiadi Sons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrosea Tbk and Pudjiadi Sons
The main advantage of trading using opposite Petrosea Tbk and Pudjiadi Sons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrosea Tbk position performs unexpectedly, Pudjiadi Sons 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 Pudjiadi Sons will offset losses from the drop in Pudjiadi Sons' 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 |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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