Correlation Between Royalindo Investa and Asia Sejahtera

Can any of the company-specific risk be diversified away by investing in both Royalindo Investa and Asia Sejahtera 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 Royalindo Investa and Asia Sejahtera into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Royalindo Investa Wijaya and Asia Sejahtera Mina, you can compare the effects of market volatilities on Royalindo Investa and Asia Sejahtera 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 Royalindo Investa with a short position of Asia Sejahtera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalindo Investa and Asia Sejahtera.

Diversification Opportunities for Royalindo Investa and Asia Sejahtera

-0.33

Correlation Coefficient

Royalindo Investa  Asia Sejahtera

Very good diversification

The 3 months correlation between Royalindo and Asia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Royalindo Investa Wijaya and Asia Sejahtera Mina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Sejahtera Mina and Royalindo Investa 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 Royalindo Investa Wijaya are associated (or correlated) with Asia Sejahtera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Sejahtera Mina has no effect on the direction of Royalindo Investa i.e., Royalindo Investa and Asia Sejahtera go up and down completely randomly.

Pair Corralation between Royalindo Investa and Asia Sejahtera

Assuming the 90 days trading horizon Royalindo Investa Wijaya is expected to under-perform the Asia Sejahtera. In addition to that, Royalindo Investa is 3.3 times more volatile than Asia Sejahtera Mina. It trades about -0.03 of its total potential returns per unit of risk. Asia Sejahtera Mina is currently generating about 0.26 per unit of volatility. If you would invest  9,000  in Asia Sejahtera Mina on February 20, 2024 and sell it today you would earn a total of  700.00  from holding Asia Sejahtera Mina or generate 7.78% return on investment over 90 days.

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

Royalindo Investa Wijaya  vs.  Asia Sejahtera Mina

Royalindo Investa Wijaya

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Royalindo Investa Wijaya are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Royalindo Investa may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Asia Sejahtera Mina

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Sejahtera Mina are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asia Sejahtera may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Royalindo Investa and Asia Sejahtera

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

The idea behind Royalindo Investa Wijaya and Asia Sejahtera Mina 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.