Correlation Between Berlina Tbk and PT Citra

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

By analyzing existing cross correlation between Berlina Tbk and PT Citra Tubindo, you can compare the effects of market volatilities on Berlina Tbk and PT Citra 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 Berlina Tbk with a short position of PT Citra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berlina Tbk and PT Citra.

Diversification Opportunities for Berlina Tbk and PT Citra

0.49

Correlation Coefficient

Berlina Tbk  PT Citra

Very weak diversification

The 3 months correlation between Berlina and CTBN is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Berlina Tbk and PT Citra Tubindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Citra Tubindo and Berlina Tbk 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 Berlina Tbk are associated (or correlated) with PT Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Citra Tubindo has no effect on the direction of Berlina Tbk i.e., Berlina Tbk and PT Citra go up and down completely randomly.

Pair Corralation between Berlina Tbk and PT Citra

Assuming the 90 days trading horizon Berlina Tbk is expected to generate 1.67 times less return on investment than PT Citra. In addition to that, Berlina Tbk is 1.02 times more volatile than PT Citra Tubindo. It trades about 0.05 of its total potential returns per unit of risk. PT Citra Tubindo is currently generating about 0.09 per unit of volatility. If you would invest  240,000  in PT Citra Tubindo on October 9, 2024 and sell it today you would earn a total of  40,000  from holding PT Citra Tubindo or generate 16.67% return on investment over 90 days.

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

Berlina Tbk  vs.  PT Citra Tubindo

Berlina Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berlina Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Berlina Tbk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PT Citra Tubindo

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Citra Tubindo are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Citra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berlina Tbk and PT Citra

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

The idea behind Berlina Tbk and PT Citra Tubindo 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.