Correlation Between Bhakti Multi and Surya Permata

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

By analyzing existing cross correlation between Bhakti Multi Artha and Surya Permata Andalan, you can compare the effects of market volatilities on Bhakti Multi and Surya Permata 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 Bhakti Multi with a short position of Surya Permata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bhakti Multi and Surya Permata.

Diversification Opportunities for Bhakti Multi and Surya Permata

0.61

Correlation Coefficient

Bhakti Multi  Surya Permata

Poor diversification

The 3 months correlation between Bhakti and Surya is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bhakti Multi Artha and Surya Permata Andalan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Permata Andalan and Bhakti Multi 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 Bhakti Multi Artha are associated (or correlated) with Surya Permata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Permata Andalan has no effect on the direction of Bhakti Multi i.e., Bhakti Multi and Surya Permata go up and down completely randomly.

Pair Corralation between Bhakti Multi and Surya Permata

Assuming the 90 days trading horizon Bhakti Multi Artha is expected to generate 0.39 times more return on investment than Surya Permata. However, Bhakti Multi Artha is 2.54 times less risky than Surya Permata. It trades about 0.2 of its potential returns per unit of risk. Surya Permata Andalan is currently generating about 0.07 per unit of risk. If you would invest  45,200  in Bhakti Multi Artha on November 29, 2024 and sell it today you would earn a total of  5,800  from holding Bhakti Multi Artha or generate 12.83% return on investment over 90 days.

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

Bhakti Multi Artha  vs.  Surya Permata Andalan

Bhakti Multi Artha

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bhakti Multi Artha are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bhakti Multi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Surya Permata Andalan

Risk-Adjusted Performance

Modest

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

Pair Trading with Bhakti Multi and Surya Permata

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

The idea behind Bhakti Multi Artha and Surya Permata Andalan 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.