Correlation Between PP Presisi and Alfa Energi

Can any of the company-specific risk be diversified away by investing in both PP Presisi and Alfa Energi 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 PP Presisi and Alfa Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PP Presisi Tbk and Alfa Energi Investama, you can compare the effects of market volatilities on PP Presisi and Alfa Energi 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 PP Presisi with a short position of Alfa Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of PP Presisi and Alfa Energi.

Diversification Opportunities for PP Presisi and Alfa Energi

0.78

Correlation Coefficient

PP Presisi  Alfa Energi

Poor diversification

The 3 months correlation between PPRE and Alfa is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PP Presisi Tbk and Alfa Energi Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Energi Investama and PP Presisi 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 PP Presisi Tbk are associated (or correlated) with Alfa Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Energi Investama has no effect on the direction of PP Presisi i.e., PP Presisi and Alfa Energi go up and down completely randomly.

Pair Corralation between PP Presisi and Alfa Energi

Assuming the 90 days trading horizon PP Presisi Tbk is expected to under-perform the Alfa Energi. In addition to that, PP Presisi is 1.24 times more volatile than Alfa Energi Investama. It trades about -0.17 of its total potential returns per unit of risk. Alfa Energi Investama is currently generating about -0.1 per unit of volatility. If you would invest  10,400  in Alfa Energi Investama on September 13, 2024 and sell it today you would lose (1,600) from holding Alfa Energi Investama or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

PP Presisi Tbk  vs.  Alfa Energi Investama

PP Presisi Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PP Presisi Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Alfa Energi Investama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Energi Investama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PP Presisi and Alfa Energi

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

The idea behind PP Presisi Tbk and Alfa Energi Investama 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.