Correlation Between Alam Sutera and Bhuwanatala Indah

Can any of the company-specific risk be diversified away by investing in both Alam Sutera and Bhuwanatala Indah 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 Alam Sutera and Bhuwanatala Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alam Sutera Realty and Bhuwanatala Indah Permai, you can compare the effects of market volatilities on Alam Sutera and Bhuwanatala Indah 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 Alam Sutera with a short position of Bhuwanatala Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alam Sutera and Bhuwanatala Indah.

Diversification Opportunities for Alam Sutera and Bhuwanatala Indah

-0.2

Correlation Coefficient

Alam Sutera  Bhuwanatala Indah

Good diversification

The 3 months correlation between Alam and Bhuwanatala is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alam Sutera Realty and Bhuwanatala Indah Permai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhuwanatala Indah Permai and Alam Sutera 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 Alam Sutera Realty are associated (or correlated) with Bhuwanatala Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhuwanatala Indah Permai has no effect on the direction of Alam Sutera i.e., Alam Sutera and Bhuwanatala Indah go up and down completely randomly.

Pair Corralation between Alam Sutera and Bhuwanatala Indah

Assuming the 90 days trading horizon Alam Sutera Realty is expected to under-perform the Bhuwanatala Indah. But the stock apears to be less risky and, when comparing its historical volatility, Alam Sutera Realty is 1.63 times less risky than Bhuwanatala Indah. The stock trades about -0.14 of its potential returns per unit of risk. The Bhuwanatala Indah Permai is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,200  in Bhuwanatala Indah Permai on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Bhuwanatala Indah Permai or generate 0.0% return on investment over 90 days.

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

Alam Sutera Realty  vs.  Bhuwanatala Indah Permai

Alam Sutera Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alam Sutera Realty 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bhuwanatala Indah Permai

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bhuwanatala Indah Permai are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Bhuwanatala Indah 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 Alam Sutera and Bhuwanatala Indah

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

The idea behind Alam Sutera Realty and Bhuwanatala Indah Permai 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.