Correlation Between Indo Kordsa and Bima Sakti

Can any of the company-specific risk be diversified away by investing in both Indo Kordsa and Bima Sakti 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 Indo Kordsa and Bima Sakti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indo Kordsa Tbk and Bima Sakti Pertiwi, you can compare the effects of market volatilities on Indo Kordsa and Bima Sakti 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 Indo Kordsa with a short position of Bima Sakti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Kordsa and Bima Sakti.

Diversification Opportunities for Indo Kordsa and Bima Sakti

-0.47

Correlation Coefficient

Indo Kordsa  Bima Sakti

Very good diversification

The 3 months correlation between Indo and Bima is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Indo Kordsa Tbk and Bima Sakti Pertiwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bima Sakti Pertiwi and Indo Kordsa 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 Indo Kordsa Tbk are associated (or correlated) with Bima Sakti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bima Sakti Pertiwi has no effect on the direction of Indo Kordsa i.e., Indo Kordsa and Bima Sakti go up and down completely randomly.

Pair Corralation between Indo Kordsa and Bima Sakti

Assuming the 90 days trading horizon Indo Kordsa Tbk is expected to generate 0.49 times more return on investment than Bima Sakti. However, Indo Kordsa Tbk is 2.03 times less risky than Bima Sakti. It trades about 0.02 of its potential returns per unit of risk. Bima Sakti Pertiwi is currently generating about 0.01 per unit of risk. If you would invest  553,097  in Indo Kordsa Tbk on August 31, 2024 and sell it today you would earn a total of  29,403  from holding Indo Kordsa Tbk or generate 5.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.57%
Values	Daily Returns

Indo Kordsa Tbk  vs.  Bima Sakti Pertiwi

Indo Kordsa Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Indo Kordsa Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Indo Kordsa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bima Sakti Pertiwi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Indo Kordsa and Bima Sakti

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

The idea behind Indo Kordsa Tbk and Bima Sakti Pertiwi 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.