Correlation Between Pt Pakuan and Citatah Tbk

Can any of the company-specific risk be diversified away by investing in both Pt Pakuan and Citatah Tbk 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 Pt Pakuan and Citatah Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Pt Pakuan and Citatah Tbk

0.7

Correlation Coefficient

Pt Pakuan  Citatah Tbk

Poor diversification

The 3 months correlation between UANG and Citatah is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pt Pakuan Tbk and Citatah Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citatah Tbk and Pt Pakuan 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 Pt Pakuan Tbk are associated (or correlated) with Citatah Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citatah Tbk has no effect on the direction of Pt Pakuan i.e., Pt Pakuan and Citatah Tbk go up and down completely randomly.

Pair Corralation between Pt Pakuan and Citatah Tbk

Assuming the 90 days trading horizon Pt Pakuan Tbk is expected to generate 0.95 times more return on investment than Citatah Tbk. However, Pt Pakuan Tbk is 1.05 times less risky than Citatah Tbk. It trades about -0.03 of its potential returns per unit of risk. Citatah Tbk is currently generating about -0.07 per unit of risk. If you would invest  79,000  in Pt Pakuan Tbk on September 12, 2024 and sell it today you would lose (5,500) from holding Pt Pakuan Tbk or give up 6.96% of portfolio value over 90 days.

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

Pt Pakuan Tbk  vs.  Citatah Tbk

Pt Pakuan Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pt Pakuan Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pt Pakuan is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Citatah Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citatah Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Pt Pakuan and Citatah Tbk

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

The idea behind Pt Pakuan Tbk and Citatah Tbk 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 Global Correlations module to find global opportunities by holding instruments from different markets.