Correlation Between Perusahaan Perseroan and Universal Corp

Can any of the company-specific risk be diversified away by investing in both Perusahaan Perseroan and Universal Corp 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 Universal Corp 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 Universal Corp, you can compare the effects of market volatilities on Perusahaan Perseroan and Universal Corp 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 Universal Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perusahaan Perseroan and Universal Corp.

Diversification Opportunities for Perusahaan Perseroan and Universal Corp

-0.64

Correlation Coefficient

Perusahaan Perseroan  Universal Corp

Excellent diversification

The 3 months correlation between Perusahaan and Universal is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and Universal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Corp 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 Universal Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Corp has no effect on the direction of Perusahaan Perseroan i.e., Perusahaan Perseroan and Universal Corp go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and Universal Corp

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the Universal Corp. In addition to that, Perusahaan Perseroan is 2.24 times more volatile than Universal Corp. It trades about -0.09 of its total potential returns per unit of risk. Universal Corp is currently generating about 0.14 per unit of volatility. If you would invest  4,623  in Universal Corp on September 22, 2024 and sell it today you would earn a total of  562.00  from holding Universal Corp or generate 12.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

Perusahaan Perseroan PT  vs.  Universal Corp

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Universal Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Universal Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Perusahaan Perseroan and Universal Corp

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

The idea behind Perusahaan Perseroan PT and Universal Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.