Correlation Between Andalan Sakti and Bhakti Multi

Can any of the company-specific risk be diversified away by investing in both Andalan Sakti and Bhakti Multi 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 Andalan Sakti and Bhakti Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Andalan Sakti Primaindo and Bhakti Multi Artha, you can compare the effects of market volatilities on Andalan Sakti and Bhakti Multi 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 Andalan Sakti with a short position of Bhakti Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andalan Sakti and Bhakti Multi.

Diversification Opportunities for Andalan Sakti and Bhakti Multi

0.59

Correlation Coefficient

Andalan Sakti  Bhakti Multi

Very weak diversification

The 3 months correlation between Andalan and Bhakti is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Andalan Sakti Primaindo and Bhakti Multi Artha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhakti Multi Artha and Andalan Sakti 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 Andalan Sakti Primaindo are associated (or correlated) with Bhakti Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhakti Multi Artha has no effect on the direction of Andalan Sakti i.e., Andalan Sakti and Bhakti Multi go up and down completely randomly.

Pair Corralation between Andalan Sakti and Bhakti Multi

Assuming the 90 days trading horizon Andalan Sakti Primaindo is expected to generate 6.71 times more return on investment than Bhakti Multi. However, Andalan Sakti is 6.71 times more volatile than Bhakti Multi Artha. It trades about 0.11 of its potential returns per unit of risk. Bhakti Multi Artha is currently generating about 0.14 per unit of risk. If you would invest  13,600  in Andalan Sakti Primaindo on December 22, 2024 and sell it today you would earn a total of  5,700  from holding Andalan Sakti Primaindo or generate 41.91% return on investment over 90 days.

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

Andalan Sakti Primaindo  vs.  Bhakti Multi Artha

Andalan Sakti Primaindo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Andalan Sakti Primaindo are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Andalan Sakti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bhakti Multi Artha

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bhakti Multi Artha are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bhakti Multi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Andalan Sakti and Bhakti Multi

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

The idea behind Andalan Sakti Primaindo and Bhakti Multi Artha 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 Anywhere module to track or share privately all of your investments from the convenience of any device.