Correlation Between Steady Safe and Rukun Raharja
Can any of the company-specific risk be diversified away by investing in both Steady Safe and Rukun Raharja 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 Steady Safe and Rukun Raharja into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steady Safe TBK and Rukun Raharja Tbk, you can compare the effects of market volatilities on Steady Safe and Rukun Raharja 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 Steady Safe with a short position of Rukun Raharja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steady Safe and Rukun Raharja.
Diversification Opportunities for Steady Safe and Rukun Raharja
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Steady and Rukun is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Steady Safe TBK and Rukun Raharja Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rukun Raharja Tbk and Steady Safe 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 Steady Safe TBK are associated (or correlated) with Rukun Raharja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rukun Raharja Tbk has no effect on the direction of Steady Safe i.e., Steady Safe and Rukun Raharja go up and down completely randomly.
Pair Corralation between Steady Safe and Rukun Raharja
Assuming the 90 days trading horizon Steady Safe is expected to generate 2.36 times less return on investment than Rukun Raharja. But when comparing it to its historical volatility, Steady Safe TBK is 1.21 times less risky than Rukun Raharja. It trades about 0.04 of its potential returns per unit of risk. Rukun Raharja Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 91,143 in Rukun Raharja Tbk on August 28, 2024 and sell it today you would earn a total of 156,857 from holding Rukun Raharja Tbk or generate 172.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steady Safe TBK vs. Rukun Raharja Tbk
Performance |
| Timeline |
| Steady Safe TBK |
| Rukun Raharja Tbk |
Steady Safe and Rukun Raharja Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steady Safe and Rukun Raharja
The main advantage of trading using opposite Steady Safe and Rukun Raharja positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steady Safe position performs unexpectedly, Rukun Raharja 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 Rukun Raharja will offset losses from the drop in Rukun Raharja's long position.The idea behind Steady Safe TBK and Rukun Raharja Tbk 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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