Correlation Between Ricky Putra and Sunson Textile

Can any of the company-specific risk be diversified away by investing in both Ricky Putra and Sunson Textile 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 Ricky Putra and Sunson Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ricky Putra Globalindo and Sunson Textile Manufacturer, you can compare the effects of market volatilities on Ricky Putra and Sunson Textile 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 Ricky Putra with a short position of Sunson Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ricky Putra and Sunson Textile.

Diversification Opportunities for Ricky Putra and Sunson Textile

0.25

Correlation Coefficient

Ricky Putra  Sunson Textile

Modest diversification

The 3 months correlation between Ricky and Sunson is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ricky Putra Globalindo and Sunson Textile Manufacturer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunson Textile Manuf and Ricky Putra 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 Ricky Putra Globalindo are associated (or correlated) with Sunson Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunson Textile Manuf has no effect on the direction of Ricky Putra i.e., Ricky Putra and Sunson Textile go up and down completely randomly.

Pair Corralation between Ricky Putra and Sunson Textile

Assuming the 90 days trading horizon Ricky Putra Globalindo is expected to generate 0.62 times more return on investment than Sunson Textile. However, Ricky Putra Globalindo is 1.6 times less risky than Sunson Textile. It trades about -0.1 of its potential returns per unit of risk. Sunson Textile Manufacturer is currently generating about -0.1 per unit of risk. If you would invest  8,500  in Ricky Putra Globalindo on September 5, 2024 and sell it today you would lose (1,400) from holding Ricky Putra Globalindo or give up 16.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ricky Putra Globalindo  vs.  Sunson Textile Manufacturer

Ricky Putra Globalindo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ricky Putra Globalindo 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.

Sunson Textile Manuf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunson Textile Manufacturer 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 Ricky Putra and Sunson Textile

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

The idea behind Ricky Putra Globalindo and Sunson Textile Manufacturer 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.