Correlation Between Batulicin Nusantara and Citra Borneo

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

By analyzing existing cross correlation between Batulicin Nusantara Maritim and Citra Borneo Utama, you can compare the effects of market volatilities on Batulicin Nusantara and Citra Borneo 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 Batulicin Nusantara with a short position of Citra Borneo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Batulicin Nusantara and Citra Borneo.

Diversification Opportunities for Batulicin Nusantara and Citra Borneo

-0.2

Correlation Coefficient

Batulicin Nusantara  Citra Borneo

Good diversification

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

Pair Corralation between Batulicin Nusantara and Citra Borneo

Assuming the 90 days trading horizon Batulicin Nusantara Maritim is expected to generate 2.91 times more return on investment than Citra Borneo. However, Batulicin Nusantara is 2.91 times more volatile than Citra Borneo Utama. It trades about 0.28 of its potential returns per unit of risk. Citra Borneo Utama is currently generating about 0.07 per unit of risk. If you would invest  36,000  in Batulicin Nusantara Maritim on December 23, 2024 and sell it today you would earn a total of  67,500  from holding Batulicin Nusantara Maritim or generate 187.5% return on investment over 90 days.

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

Batulicin Nusantara Maritim  vs.  Citra Borneo Utama

Batulicin Nusantara

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Batulicin Nusantara Maritim are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Batulicin Nusantara disclosed solid returns over the last few months and may actually be approaching a breakup point.

Citra Borneo Utama

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citra Borneo Utama are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Citra Borneo may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Batulicin Nusantara and Citra Borneo

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

The idea behind Batulicin Nusantara Maritim and Citra Borneo Utama 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.