Correlation Between Bekasi Fajar and Metro Healthcare

Can any of the company-specific risk be diversified away by investing in both Bekasi Fajar and Metro Healthcare 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 Metro Healthcare 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 Metro Healthcare Indonesia, you can compare the effects of market volatilities on Bekasi Fajar and Metro Healthcare 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 Metro Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bekasi Fajar and Metro Healthcare.

Diversification Opportunities for Bekasi Fajar and Metro Healthcare

-0.81

Correlation Coefficient

Bekasi Fajar  Metro Healthcare

Pay attention - limited upside

The 3 months correlation between Bekasi and Metro is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bekasi Fajar Industrial and Metro Healthcare Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Healthcare Ind 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 Metro Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Healthcare Ind has no effect on the direction of Bekasi Fajar i.e., Bekasi Fajar and Metro Healthcare go up and down completely randomly.

Pair Corralation between Bekasi Fajar and Metro Healthcare

Assuming the 90 days trading horizon Bekasi Fajar Industrial is expected to under-perform the Metro Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Bekasi Fajar Industrial is 1.79 times less risky than Metro Healthcare. The stock trades about -0.09 of its potential returns per unit of risk. The Metro Healthcare Indonesia is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  18,200  in Metro Healthcare Indonesia on October 24, 2024 and sell it today you would lose (100.00) from holding Metro Healthcare Indonesia or give up 0.55% of portfolio value over 90 days.

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

Bekasi Fajar Industrial  vs.  Metro Healthcare Indonesia

Bekasi Fajar Industrial

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Metro Healthcare Ind

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Healthcare Indonesia are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Metro Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bekasi Fajar and Metro Healthcare

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

The idea behind Bekasi Fajar Industrial and Metro Healthcare Indonesia 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.