Correlation Between Berlina Tbk and Sriwahana

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

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

Diversification Opportunities for Berlina Tbk and Sriwahana

-0.21

Correlation Coefficient

Berlina Tbk  Sriwahana

Very good diversification

The 3 months correlation between Berlina and Sriwahana is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Berlina Tbk and Sriwahana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sriwahana 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 Sriwahana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sriwahana has no effect on the direction of Berlina Tbk i.e., Berlina Tbk and Sriwahana go up and down completely randomly.

Pair Corralation between Berlina Tbk and Sriwahana

Assuming the 90 days trading horizon Berlina Tbk is expected to generate 0.81 times more return on investment than Sriwahana. However, Berlina Tbk is 1.24 times less risky than Sriwahana. It trades about 0.01 of its potential returns per unit of risk. Sriwahana is currently generating about -0.12 per unit of risk. If you would invest  71,500  in Berlina Tbk on October 26, 2024 and sell it today you would lose (2,000) from holding Berlina Tbk or give up 2.8% of portfolio value over 90 days.

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

Berlina Tbk  vs.  Sriwahana

Berlina Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berlina Tbk are ranked lower than 3 (%) 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.

Sriwahana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sriwahana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Berlina Tbk and Sriwahana

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

The idea behind Berlina Tbk and Sriwahana 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .