Correlation Between Asuransi Ramayana and Asuransi Bina

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

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

Diversification Opportunities for Asuransi Ramayana and Asuransi Bina

0.21

Correlation Coefficient

Asuransi Ramayana  Asuransi Bina

Modest diversification

The 3 months correlation between Asuransi and Asuransi is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Asuransi Ramayana Tbk and Asuransi Bina Dana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Bina Dana and Asuransi Ramayana 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 Asuransi Ramayana Tbk are associated (or correlated) with Asuransi Bina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Bina Dana has no effect on the direction of Asuransi Ramayana i.e., Asuransi Ramayana and Asuransi Bina go up and down completely randomly.

Pair Corralation between Asuransi Ramayana and Asuransi Bina

Assuming the 90 days trading horizon Asuransi Ramayana Tbk is expected to generate 0.89 times more return on investment than Asuransi Bina. However, Asuransi Ramayana Tbk is 1.13 times less risky than Asuransi Bina. It trades about -0.09 of its potential returns per unit of risk. Asuransi Bina Dana is currently generating about -0.12 per unit of risk. If you would invest  38,000  in Asuransi Ramayana Tbk on September 3, 2024 and sell it today you would lose (2,400) from holding Asuransi Ramayana Tbk or give up 6.32% of portfolio value over 90 days.

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

Asuransi Ramayana Tbk  vs.  Asuransi Bina Dana

Asuransi Ramayana Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Asuransi Bina Dana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asuransi Bina Dana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Asuransi Ramayana and Asuransi Bina

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

The idea behind Asuransi Ramayana Tbk and Asuransi Bina Dana 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.