Correlation Between Terregra Asia and Putra Rajawali
Can any of the company-specific risk be diversified away by investing in both Terregra Asia and Putra Rajawali 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 Terregra Asia and Putra Rajawali into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terregra Asia Energy and Putra Rajawali Kencana, you can compare the effects of market volatilities on Terregra Asia and Putra Rajawali 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 Terregra Asia with a short position of Putra Rajawali. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terregra Asia and Putra Rajawali.
Diversification Opportunities for Terregra Asia and Putra Rajawali
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Terregra and Putra is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Terregra Asia Energy and Putra Rajawali Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putra Rajawali Kencana and Terregra Asia 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 Terregra Asia Energy are associated (or correlated) with Putra Rajawali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putra Rajawali Kencana has no effect on the direction of Terregra Asia i.e., Terregra Asia and Putra Rajawali go up and down completely randomly.
Pair Corralation between Terregra Asia and Putra Rajawali
Assuming the 90 days trading horizon Terregra Asia Energy is expected to generate 0.93 times more return on investment than Putra Rajawali. However, Terregra Asia Energy is 1.08 times less risky than Putra Rajawali. It trades about -0.04 of its potential returns per unit of risk. Putra Rajawali Kencana is currently generating about -0.06 per unit of risk. If you would invest 5,000 in Terregra Asia Energy on September 4, 2024 and sell it today you would lose (3,200) from holding Terregra Asia Energy or give up 64.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terregra Asia Energy vs. Putra Rajawali Kencana
Performance |
| Timeline |
| Terregra Asia Energy |
| Putra Rajawali Kencana |
Terregra Asia and Putra Rajawali Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terregra Asia and Putra Rajawali
The main advantage of trading using opposite Terregra Asia and Putra Rajawali positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terregra Asia position performs unexpectedly, Putra Rajawali 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 Putra Rajawali will offset losses from the drop in Putra Rajawali's long position.| Terregra Asia vs. Kapuas Prima Coal | Terregra Asia vs. Cikarang Listrindo Tbk | Terregra Asia vs. PP Presisi Tbk | Terregra Asia vs. Alfa Energi Investama |
| Putra Rajawali vs. PT Trimuda Nuansa | Putra Rajawali vs. Yelooo Integra Datanet | Putra Rajawali vs. Transcoal Pacific Tbk | Putra Rajawali vs. Weha Transportasi Indonesia |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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