Correlation Between Cahayaputra Asa and Menteng Heritage

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

By analyzing existing cross correlation between Cahayaputra Asa Keramik and Menteng Heritage Realty, you can compare the effects of market volatilities on Cahayaputra Asa and Menteng Heritage 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 Cahayaputra Asa with a short position of Menteng Heritage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cahayaputra Asa and Menteng Heritage.

Diversification Opportunities for Cahayaputra Asa and Menteng Heritage

0.05

Correlation Coefficient

Cahayaputra Asa  Menteng Heritage

Significant diversification

The 3 months correlation between Cahayaputra and Menteng is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cahayaputra Asa Keramik and Menteng Heritage Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menteng Heritage Realty and Cahayaputra Asa 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 Cahayaputra Asa Keramik are associated (or correlated) with Menteng Heritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menteng Heritage Realty has no effect on the direction of Cahayaputra Asa i.e., Cahayaputra Asa and Menteng Heritage go up and down completely randomly.

Pair Corralation between Cahayaputra Asa and Menteng Heritage

Assuming the 90 days trading horizon Cahayaputra Asa is expected to generate 6.07 times less return on investment than Menteng Heritage. But when comparing it to its historical volatility, Cahayaputra Asa Keramik is 1.08 times less risky than Menteng Heritage. It trades about 0.02 of its potential returns per unit of risk. Menteng Heritage Realty is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,500  in Menteng Heritage Realty on September 1, 2024 and sell it today you would earn a total of  1,100  from holding Menteng Heritage Realty or generate 31.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Cahayaputra Asa Keramik  vs.  Menteng Heritage Realty

Cahayaputra Asa Keramik

Risk-Adjusted Performance

1 of 100

Weak

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

Menteng Heritage Realty

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Menteng Heritage Realty are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Menteng Heritage disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cahayaputra Asa and Menteng Heritage

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

The idea behind Cahayaputra Asa Keramik and Menteng Heritage Realty 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.