Correlation Between Radiant Utama and Asia Pacific
Can any of the company-specific risk be diversified away by investing in both Radiant Utama and Asia Pacific 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 Radiant Utama and Asia Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Radiant Utama Interinsco and Asia Pacific Fibers, you can compare the effects of market volatilities on Radiant Utama and Asia Pacific 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 Radiant Utama with a short position of Asia Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radiant Utama and Asia Pacific.
Diversification Opportunities for Radiant Utama and Asia Pacific
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Radiant and Asia is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Utama Interinsco and Asia Pacific Fibers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Fibers and Radiant Utama 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 Radiant Utama Interinsco are associated (or correlated) with Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Fibers has no effect on the direction of Radiant Utama i.e., Radiant Utama and Asia Pacific go up and down completely randomly.
Pair Corralation between Radiant Utama and Asia Pacific
Assuming the 90 days trading horizon Radiant Utama Interinsco is expected to generate 1.16 times more return on investment than Asia Pacific. However, Radiant Utama is 1.16 times more volatile than Asia Pacific Fibers. It trades about 0.01 of its potential returns per unit of risk. Asia Pacific Fibers is currently generating about -0.07 per unit of risk. If you would invest 20,224 in Radiant Utama Interinsco on August 25, 2024 and sell it today you would lose (3,024) from holding Radiant Utama Interinsco or give up 14.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Radiant Utama Interinsco vs. Asia Pacific Fibers
Performance |
| Timeline |
| Radiant Utama Interinsco |
| Asia Pacific Fibers |
Radiant Utama and Asia Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Radiant Utama and Asia Pacific
The main advantage of trading using opposite Radiant Utama and Asia Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radiant Utama position performs unexpectedly, Asia Pacific 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 Asia Pacific will offset losses from the drop in Asia Pacific's long position.| Radiant Utama vs. Petrosea Tbk | Radiant Utama vs. Harum Energy Tbk | Radiant Utama vs. Perdana Karya Perkasa | Radiant Utama vs. Samindo Resources Tbk |
| Asia Pacific vs. PT Sreeya Sewu | Asia Pacific vs. Multistrada Arah Sarana | Asia Pacific vs. Polychem Indonesia Tbk | Asia Pacific vs. Pan Brothers 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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