Correlation Between Perusahaan Perseroan and Covenant Logistics

Can any of the company-specific risk be diversified away by investing in both Perusahaan Perseroan and Covenant Logistics 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 Perusahaan Perseroan and Covenant Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perusahaan Perseroan PT and Covenant Logistics Group, you can compare the effects of market volatilities on Perusahaan Perseroan and Covenant Logistics 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 Perusahaan Perseroan with a short position of Covenant Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perusahaan Perseroan and Covenant Logistics.

Diversification Opportunities for Perusahaan Perseroan and Covenant Logistics

-0.62

Correlation Coefficient

Perusahaan Perseroan  Covenant Logistics

Excellent diversification

The 3 months correlation between Perusahaan and Covenant is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and Covenant Logistics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covenant Logistics and Perusahaan Perseroan 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 Perusahaan Perseroan PT are associated (or correlated) with Covenant Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covenant Logistics has no effect on the direction of Perusahaan Perseroan i.e., Perusahaan Perseroan and Covenant Logistics go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and Covenant Logistics

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to generate 1.48 times more return on investment than Covenant Logistics. However, Perusahaan Perseroan is 1.48 times more volatile than Covenant Logistics Group. It trades about 0.0 of its potential returns per unit of risk. Covenant Logistics Group is currently generating about -0.12 per unit of risk. If you would invest  1,570  in Perusahaan Perseroan PT on September 29, 2024 and sell it today you would lose (10.00) from holding Perusahaan Perseroan PT or give up 0.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Perusahaan Perseroan PT  vs.  Covenant Logistics Group

Perusahaan Perseroan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perusahaan Perseroan PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Covenant Logistics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Covenant Logistics Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Covenant Logistics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perusahaan Perseroan and Covenant Logistics

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

The idea behind Perusahaan Perseroan PT and Covenant Logistics Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.