Correlation Between Singaraja Putra and Gunung Raja

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

By analyzing existing cross correlation between Singaraja Putra and Gunung Raja Paksi, you can compare the effects of market volatilities on Singaraja Putra and Gunung Raja 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 Singaraja Putra with a short position of Gunung Raja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singaraja Putra and Gunung Raja.

Diversification Opportunities for Singaraja Putra and Gunung Raja

0.03

Correlation Coefficient

Singaraja Putra  Gunung Raja

Significant diversification

The 3 months correlation between Singaraja and Gunung is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Singaraja Putra and Gunung Raja Paksi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunung Raja Paksi and Singaraja 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 Singaraja Putra are associated (or correlated) with Gunung Raja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunung Raja Paksi has no effect on the direction of Singaraja Putra i.e., Singaraja Putra and Gunung Raja go up and down completely randomly.

Pair Corralation between Singaraja Putra and Gunung Raja

Assuming the 90 days trading horizon Singaraja Putra is expected to generate 0.48 times more return on investment than Gunung Raja. However, Singaraja Putra is 2.1 times less risky than Gunung Raja. It trades about 0.2 of its potential returns per unit of risk. Gunung Raja Paksi is currently generating about 0.04 per unit of risk. If you would invest  246,000  in Singaraja Putra on September 19, 2024 and sell it today you would earn a total of  252,000  from holding Singaraja Putra or generate 102.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Singaraja Putra  vs.  Gunung Raja Paksi

Singaraja Putra

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singaraja Putra are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Singaraja Putra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Gunung Raja Paksi

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gunung Raja Paksi are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Gunung Raja disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singaraja Putra and Gunung Raja

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

The idea behind Singaraja Putra and Gunung Raja Paksi 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.