Correlation Between Bintang Oto and Paramita Bangun

Can any of the company-specific risk be diversified away by investing in both Bintang Oto and Paramita Bangun 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 Bintang Oto and Paramita Bangun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bintang Oto Global and Paramita Bangun Sarana, you can compare the effects of market volatilities on Bintang Oto and Paramita Bangun 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 Bintang Oto with a short position of Paramita Bangun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bintang Oto and Paramita Bangun.

Diversification Opportunities for Bintang Oto and Paramita Bangun

-0.57

Correlation Coefficient

Bintang Oto  Paramita Bangun

Excellent diversification

The 3 months correlation between Bintang and Paramita is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bintang Oto Global and Paramita Bangun Sarana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramita Bangun Sarana and Bintang Oto 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 Bintang Oto Global are associated (or correlated) with Paramita Bangun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramita Bangun Sarana has no effect on the direction of Bintang Oto i.e., Bintang Oto and Paramita Bangun go up and down completely randomly.

Pair Corralation between Bintang Oto and Paramita Bangun

Assuming the 90 days trading horizon Bintang Oto Global is expected to under-perform the Paramita Bangun. In addition to that, Bintang Oto is 1.06 times more volatile than Paramita Bangun Sarana. It trades about 0.0 of its total potential returns per unit of risk. Paramita Bangun Sarana is currently generating about 0.16 per unit of volatility. If you would invest  29,200  in Paramita Bangun Sarana on October 26, 2024 and sell it today you would earn a total of  6,600  from holding Paramita Bangun Sarana or generate 22.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Bintang Oto Global  vs.  Paramita Bangun Sarana

Bintang Oto Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bintang Oto Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bintang Oto is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Paramita Bangun Sarana

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paramita Bangun Sarana are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Paramita Bangun disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bintang Oto and Paramita Bangun

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

The idea behind Bintang Oto Global and Paramita Bangun Sarana 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.