Correlation Between Berkah Beton and Ladangbaja Murni

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

By analyzing existing cross correlation between Berkah Beton Sadaya and Ladangbaja Murni PT, you can compare the effects of market volatilities on Berkah Beton and Ladangbaja Murni 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 Berkah Beton with a short position of Ladangbaja Murni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkah Beton and Ladangbaja Murni.

Diversification Opportunities for Berkah Beton and Ladangbaja Murni

0.79

Correlation Coefficient

Berkah Beton  Ladangbaja Murni

Poor diversification

The 3 months correlation between Berkah and Ladangbaja is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Berkah Beton Sadaya and Ladangbaja Murni PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladangbaja Murni and Berkah Beton 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 Berkah Beton Sadaya are associated (or correlated) with Ladangbaja Murni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladangbaja Murni has no effect on the direction of Berkah Beton i.e., Berkah Beton and Ladangbaja Murni go up and down completely randomly.

Pair Corralation between Berkah Beton and Ladangbaja Murni

Assuming the 90 days trading horizon Berkah Beton Sadaya is expected to generate 1.17 times more return on investment than Ladangbaja Murni. However, Berkah Beton is 1.17 times more volatile than Ladangbaja Murni PT. It trades about -0.06 of its potential returns per unit of risk. Ladangbaja Murni PT is currently generating about -0.09 per unit of risk. If you would invest  900.00  in Berkah Beton Sadaya on September 1, 2024 and sell it today you would lose (400.00) from holding Berkah Beton Sadaya or give up 44.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Berkah Beton Sadaya  vs.  Ladangbaja Murni PT

Berkah Beton Sadaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berkah Beton Sadaya 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ladangbaja Murni

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ladangbaja Murni PT 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Berkah Beton and Ladangbaja Murni

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

The idea behind Berkah Beton Sadaya and Ladangbaja Murni PT 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.