Correlation Between Alkindo Naratama and Bintang Mitra

Can any of the company-specific risk be diversified away by investing in both Alkindo Naratama and Bintang Mitra 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 Alkindo Naratama and Bintang Mitra into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Alkindo Naratama and Bintang Mitra

0.44

Correlation Coefficient

Alkindo Naratama  Bintang Mitra

Very weak diversification

The 3 months correlation between Alkindo and Bintang is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Alkindo Naratama Tbk and Bintang Mitra Semestaraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Mitra Semestaraya and Alkindo Naratama 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 Alkindo Naratama Tbk are associated (or correlated) with Bintang Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Mitra Semestaraya has no effect on the direction of Alkindo Naratama i.e., Alkindo Naratama and Bintang Mitra go up and down completely randomly.

Pair Corralation between Alkindo Naratama and Bintang Mitra

Assuming the 90 days trading horizon Alkindo Naratama Tbk is expected to generate 1.65 times more return on investment than Bintang Mitra. However, Alkindo Naratama is 1.65 times more volatile than Bintang Mitra Semestaraya. It trades about 0.05 of its potential returns per unit of risk. Bintang Mitra Semestaraya is currently generating about -0.41 per unit of risk. If you would invest  48,800  in Alkindo Naratama Tbk on December 4, 2024 and sell it today you would earn a total of  800.00  from holding Alkindo Naratama Tbk or generate 1.64% return on investment over 90 days.

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

Alkindo Naratama Tbk  vs.  Bintang Mitra Semestaraya

Alkindo Naratama Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alkindo Naratama Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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.

Bintang Mitra Semestaraya

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bintang Mitra Semestaraya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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 Alkindo Naratama and Bintang Mitra

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

The idea behind Alkindo Naratama Tbk and Bintang Mitra Semestaraya 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.