Correlation Between PT Cilacap and Bangun Karya

Can any of the company-specific risk be diversified away by investing in both PT Cilacap and Bangun Karya 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 Cilacap and Bangun Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Cilacap Samudera and Bangun Karya Perkasa, you can compare the effects of market volatilities on PT Cilacap and Bangun Karya 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 Cilacap with a short position of Bangun Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Cilacap and Bangun Karya.

Diversification Opportunities for PT Cilacap and Bangun Karya

0.41

Correlation Coefficient

PT Cilacap  Bangun Karya

Very weak diversification

The 3 months correlation between ASHA and Bangun is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PT Cilacap Samudera and Bangun Karya Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangun Karya Perkasa and PT Cilacap 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 Cilacap Samudera are associated (or correlated) with Bangun Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangun Karya Perkasa has no effect on the direction of PT Cilacap i.e., PT Cilacap and Bangun Karya go up and down completely randomly.

Pair Corralation between PT Cilacap and Bangun Karya

Assuming the 90 days trading horizon PT Cilacap Samudera is expected to under-perform the Bangun Karya. In addition to that, PT Cilacap is 2.8 times more volatile than Bangun Karya Perkasa. It trades about -0.05 of its total potential returns per unit of risk. Bangun Karya Perkasa is currently generating about -0.04 per unit of volatility. If you would invest  5,700  in Bangun Karya Perkasa on September 12, 2024 and sell it today you would lose (300.00) from holding Bangun Karya Perkasa or give up 5.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

PT Cilacap Samudera  vs.  Bangun Karya Perkasa

PT Cilacap Samudera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Cilacap Samudera 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bangun Karya Perkasa

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PT Cilacap and Bangun Karya

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

The idea behind PT Cilacap Samudera and Bangun Karya Perkasa 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.