Correlation Between Berlian Laju and Citra Marga

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

By analyzing existing cross correlation between Berlian Laju Tanker and Citra Marga Nusaphala, you can compare the effects of market volatilities on Berlian Laju and Citra Marga 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 Berlian Laju with a short position of Citra Marga. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berlian Laju and Citra Marga.

Diversification Opportunities for Berlian Laju and Citra Marga

0.39

Correlation Coefficient

Berlian Laju  Citra Marga

Weak diversification

The 3 months correlation between Berlian and Citra is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Berlian Laju Tanker and Citra Marga Nusaphala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citra Marga Nusaphala and Berlian Laju 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 Berlian Laju Tanker are associated (or correlated) with Citra Marga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citra Marga Nusaphala has no effect on the direction of Berlian Laju i.e., Berlian Laju and Citra Marga go up and down completely randomly.

Pair Corralation between Berlian Laju and Citra Marga

Assuming the 90 days trading horizon Berlian Laju is expected to generate 7.52 times less return on investment than Citra Marga. But when comparing it to its historical volatility, Berlian Laju Tanker is 2.46 times less risky than Citra Marga. It trades about 0.04 of its potential returns per unit of risk. Citra Marga Nusaphala is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  141,500  in Citra Marga Nusaphala on November 29, 2024 and sell it today you would earn a total of  74,500  from holding Citra Marga Nusaphala or generate 52.65% return on investment over 90 days.

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

Berlian Laju Tanker  vs.  Citra Marga Nusaphala

Berlian Laju Tanker

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berlian Laju Tanker are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Berlian Laju may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Citra Marga Nusaphala

Risk-Adjusted Performance

OK

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

Pair Trading with Berlian Laju and Citra Marga

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

The idea behind Berlian Laju Tanker and Citra Marga Nusaphala 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.