Correlation Between Andalan Sakti and Karya Bersama

Can any of the company-specific risk be diversified away by investing in both Andalan Sakti and Karya Bersama 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 Karya Bersama 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 Karya Bersama Anugerah, you can compare the effects of market volatilities on Andalan Sakti and Karya Bersama 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 Karya Bersama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andalan Sakti and Karya Bersama.

Diversification Opportunities for Andalan Sakti and Karya Bersama

0.36

Correlation Coefficient

Andalan Sakti  Karya Bersama

Weak diversification

The 3 months correlation between Andalan and Karya is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Andalan Sakti Primaindo and Karya Bersama Anugerah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karya Bersama Anugerah 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 Karya Bersama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karya Bersama Anugerah has no effect on the direction of Andalan Sakti i.e., Andalan Sakti and Karya Bersama go up and down completely randomly.

Pair Corralation between Andalan Sakti and Karya Bersama

Assuming the 90 days trading horizon Andalan Sakti Primaindo is expected to generate 1.97 times more return on investment than Karya Bersama. However, Andalan Sakti is 1.97 times more volatile than Karya Bersama Anugerah. It trades about 0.12 of its potential returns per unit of risk. Karya Bersama Anugerah is currently generating about 0.17 per unit of risk. If you would invest  13,600  in Andalan Sakti Primaindo on December 21, 2024 and sell it today you would earn a total of  6,400  from holding Andalan Sakti Primaindo or generate 47.06% return on investment over 90 days.

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

Andalan Sakti Primaindo  vs.  Karya Bersama Anugerah

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 9 (%) 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.

Karya Bersama Anugerah

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Karya Bersama Anugerah are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Karya Bersama disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Andalan Sakti and Karya Bersama

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

The idea behind Andalan Sakti Primaindo and Karya Bersama Anugerah 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.