Correlation Between Arwana Citramulia and Asuransi Kresna

Can any of the company-specific risk be diversified away by investing in both Arwana Citramulia and Asuransi Kresna 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 Arwana Citramulia and Asuransi Kresna into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Arwana Citramulia and Asuransi Kresna

0.46

Correlation Coefficient

Arwana Citramulia  Asuransi Kresna

Very weak diversification

The 3 months correlation between Arwana and Asuransi is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Arwana Citramulia Tbk and Asuransi Kresna Mitra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Kresna Mitra and Arwana Citramulia 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 Arwana Citramulia Tbk are associated (or correlated) with Asuransi Kresna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Kresna Mitra has no effect on the direction of Arwana Citramulia i.e., Arwana Citramulia and Asuransi Kresna go up and down completely randomly.

Pair Corralation between Arwana Citramulia and Asuransi Kresna

Assuming the 90 days trading horizon Arwana Citramulia Tbk is expected to under-perform the Asuransi Kresna. But the stock apears to be less risky and, when comparing its historical volatility, Arwana Citramulia Tbk is 3.67 times less risky than Asuransi Kresna. The stock trades about -0.16 of its potential returns per unit of risk. The Asuransi Kresna Mitra is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,400  in Asuransi Kresna Mitra on October 16, 2024 and sell it today you would lose (100.00) from holding Asuransi Kresna Mitra or give up 7.14% of portfolio value over 90 days.

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

Arwana Citramulia Tbk  vs.  Asuransi Kresna Mitra

Arwana Citramulia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arwana Citramulia Tbk 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Asuransi Kresna Mitra

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Arwana Citramulia and Asuransi Kresna

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

The idea behind Arwana Citramulia Tbk and Asuransi Kresna Mitra 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.