Correlation Between Benakat Petroleum and Krida Jaringan

Can any of the company-specific risk be diversified away by investing in both Benakat Petroleum and Krida Jaringan 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 Benakat Petroleum and Krida Jaringan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Benakat Petroleum Energy and Krida Jaringan Nusantara, you can compare the effects of market volatilities on Benakat Petroleum and Krida Jaringan 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 Benakat Petroleum with a short position of Krida Jaringan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benakat Petroleum and Krida Jaringan.

Diversification Opportunities for Benakat Petroleum and Krida Jaringan

0.31

Correlation Coefficient

Benakat Petroleum  Krida Jaringan

Weak diversification

The 3 months correlation between Benakat and Krida is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Benakat Petroleum Energy and Krida Jaringan Nusantara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krida Jaringan Nusantara and Benakat Petroleum 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 Benakat Petroleum Energy are associated (or correlated) with Krida Jaringan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krida Jaringan Nusantara has no effect on the direction of Benakat Petroleum i.e., Benakat Petroleum and Krida Jaringan go up and down completely randomly.

Pair Corralation between Benakat Petroleum and Krida Jaringan

Assuming the 90 days trading horizon Benakat Petroleum Energy is expected to generate 0.53 times more return on investment than Krida Jaringan. However, Benakat Petroleum Energy is 1.9 times less risky than Krida Jaringan. It trades about -0.28 of its potential returns per unit of risk. Krida Jaringan Nusantara is currently generating about -0.32 per unit of risk. If you would invest  9,100  in Benakat Petroleum Energy on December 2, 2024 and sell it today you would lose (1,400) from holding Benakat Petroleum Energy or give up 15.38% of portfolio value over 90 days.

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

Benakat Petroleum Energy  vs.  Krida Jaringan Nusantara

Benakat Petroleum Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benakat Petroleum Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Krida Jaringan Nusantara

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Krida Jaringan Nusantara are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Krida Jaringan disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Benakat Petroleum and Krida Jaringan

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

The idea behind Benakat Petroleum Energy and Krida Jaringan Nusantara 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.