Correlation Between Rukun Raharja and Akbar Indomakmur
Can any of the company-specific risk be diversified away by investing in both Rukun Raharja and Akbar Indomakmur 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 Rukun Raharja and Akbar Indomakmur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rukun Raharja Tbk and Akbar Indomakmur Stimec, you can compare the effects of market volatilities on Rukun Raharja and Akbar Indomakmur 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 Rukun Raharja with a short position of Akbar Indomakmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rukun Raharja and Akbar Indomakmur.
Diversification Opportunities for Rukun Raharja and Akbar Indomakmur
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rukun and Akbar is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Rukun Raharja Tbk and Akbar Indomakmur Stimec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akbar Indomakmur Stimec and Rukun Raharja 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 Rukun Raharja Tbk are associated (or correlated) with Akbar Indomakmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akbar Indomakmur Stimec has no effect on the direction of Rukun Raharja i.e., Rukun Raharja and Akbar Indomakmur go up and down completely randomly.
Pair Corralation between Rukun Raharja and Akbar Indomakmur
Assuming the 90 days trading horizon Rukun Raharja Tbk is expected to generate 3.19 times more return on investment than Akbar Indomakmur. However, Rukun Raharja is 3.19 times more volatile than Akbar Indomakmur Stimec. It trades about 0.28 of its potential returns per unit of risk. Akbar Indomakmur Stimec is currently generating about -0.05 per unit of risk. If you would invest 173,500 in Rukun Raharja Tbk on August 28, 2024 and sell it today you would earn a total of 74,500 from holding Rukun Raharja Tbk or generate 42.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rukun Raharja Tbk vs. Akbar Indomakmur Stimec
Performance |
| Timeline |
| Rukun Raharja Tbk |
| Akbar Indomakmur Stimec |
Rukun Raharja and Akbar Indomakmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rukun Raharja and Akbar Indomakmur
The main advantage of trading using opposite Rukun Raharja and Akbar Indomakmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rukun Raharja position performs unexpectedly, Akbar Indomakmur 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 Akbar Indomakmur will offset losses from the drop in Akbar Indomakmur's long position.The idea behind Rukun Raharja Tbk and Akbar Indomakmur Stimec 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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