Correlation Between Betonjaya Manunggal and Berlina Tbk

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

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

Diversification Opportunities for Betonjaya Manunggal and Berlina Tbk

-0.26

Correlation Coefficient

Betonjaya Manunggal  Berlina Tbk

Very good diversification

The 3 months correlation between Betonjaya and Berlina is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Betonjaya Manunggal Tbk and Berlina Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berlina Tbk and Betonjaya Manunggal 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 Betonjaya Manunggal Tbk are associated (or correlated) with Berlina Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berlina Tbk has no effect on the direction of Betonjaya Manunggal i.e., Betonjaya Manunggal and Berlina Tbk go up and down completely randomly.

Pair Corralation between Betonjaya Manunggal and Berlina Tbk

Assuming the 90 days trading horizon Betonjaya Manunggal Tbk is expected to generate 0.9 times more return on investment than Berlina Tbk. However, Betonjaya Manunggal Tbk is 1.11 times less risky than Berlina Tbk. It trades about 0.03 of its potential returns per unit of risk. Berlina Tbk is currently generating about 0.0 per unit of risk. If you would invest  40,600  in Betonjaya Manunggal Tbk on December 3, 2024 and sell it today you would earn a total of  1,000.00  from holding Betonjaya Manunggal Tbk or generate 2.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Betonjaya Manunggal Tbk  vs.  Berlina Tbk

Betonjaya Manunggal Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Betonjaya Manunggal Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Betonjaya Manunggal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Berlina Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Berlina Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Berlina Tbk 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 Betonjaya Manunggal and Berlina Tbk

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

The idea behind Betonjaya Manunggal Tbk and Berlina Tbk 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.