Correlation Between Bekasi Fajar and Adi Sarana

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

By analyzing existing cross correlation between Bekasi Fajar Industrial and Adi Sarana Armada, you can compare the effects of market volatilities on Bekasi Fajar and Adi Sarana 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 Bekasi Fajar with a short position of Adi Sarana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bekasi Fajar and Adi Sarana.

Diversification Opportunities for Bekasi Fajar and Adi Sarana

0.94

Correlation Coefficient

Bekasi Fajar  Adi Sarana

Almost no diversification

The 3 months correlation between Bekasi and Adi is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bekasi Fajar Industrial and Adi Sarana Armada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adi Sarana Armada and Bekasi Fajar 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 Bekasi Fajar Industrial are associated (or correlated) with Adi Sarana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adi Sarana Armada has no effect on the direction of Bekasi Fajar i.e., Bekasi Fajar and Adi Sarana go up and down completely randomly.

Pair Corralation between Bekasi Fajar and Adi Sarana

Assuming the 90 days trading horizon Bekasi Fajar Industrial is expected to generate 0.74 times more return on investment than Adi Sarana. However, Bekasi Fajar Industrial is 1.35 times less risky than Adi Sarana. It trades about -0.12 of its potential returns per unit of risk. Adi Sarana Armada is currently generating about -0.15 per unit of risk. If you would invest  10,100  in Bekasi Fajar Industrial on December 29, 2024 and sell it today you would lose (1,500) from holding Bekasi Fajar Industrial or give up 14.85% of portfolio value over 90 days.

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

Bekasi Fajar Industrial  vs.  Adi Sarana Armada

Bekasi Fajar Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bekasi Fajar Industrial 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.

Adi Sarana Armada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adi Sarana Armada 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.

Pair Trading with Bekasi Fajar and Adi Sarana

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

The idea behind Bekasi Fajar Industrial and Adi Sarana Armada 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.