Correlation Between Tera Data and PT Utama

Can any of the company-specific risk be diversified away by investing in both Tera Data and PT Utama 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 Tera Data and PT Utama into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tera Data Indonusa and PT Utama Radar, you can compare the effects of market volatilities on Tera Data and PT Utama 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 Tera Data with a short position of PT Utama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tera Data and PT Utama.

Diversification Opportunities for Tera Data and PT Utama

-0.1

Correlation Coefficient

Tera Data  PT Utama

Good diversification

The 3 months correlation between Tera and RCCC is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tera Data Indonusa and PT Utama Radar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Utama Radar and Tera Data 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 Tera Data Indonusa are associated (or correlated) with PT Utama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Utama Radar has no effect on the direction of Tera Data i.e., Tera Data and PT Utama go up and down completely randomly.

Pair Corralation between Tera Data and PT Utama

Assuming the 90 days trading horizon Tera Data Indonusa is expected to generate 0.63 times more return on investment than PT Utama. However, Tera Data Indonusa is 1.59 times less risky than PT Utama. It trades about 0.13 of its potential returns per unit of risk. PT Utama Radar is currently generating about -0.32 per unit of risk. If you would invest  12,196  in Tera Data Indonusa on September 15, 2024 and sell it today you would earn a total of  904.00  from holding Tera Data Indonusa or generate 7.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Tera Data Indonusa  vs.  PT Utama Radar

Tera Data Indonusa

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tera Data Indonusa are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tera Data disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Utama Radar

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Utama Radar are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Utama disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tera Data and PT Utama

The main advantage of trading using opposite Tera Data and PT Utama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tera Data position performs unexpectedly, PT Utama 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 PT Utama will offset losses from the drop in PT Utama's long position.

The idea behind Tera Data Indonusa and PT Utama Radar 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.