Correlation Between Campina Ice and Pratama Abadi

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

By analyzing existing cross correlation between Campina Ice Cream and Pratama Abadi Nusa, you can compare the effects of market volatilities on Campina Ice and Pratama Abadi 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 Campina Ice with a short position of Pratama Abadi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campina Ice and Pratama Abadi.

Diversification Opportunities for Campina Ice and Pratama Abadi

-0.69

Correlation Coefficient

Campina Ice  Pratama Abadi

Excellent diversification

The 3 months correlation between Campina and Pratama is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Campina Ice Cream and Pratama Abadi Nusa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pratama Abadi Nusa and Campina Ice 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 Campina Ice Cream are associated (or correlated) with Pratama Abadi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pratama Abadi Nusa has no effect on the direction of Campina Ice i.e., Campina Ice and Pratama Abadi go up and down completely randomly.

Pair Corralation between Campina Ice and Pratama Abadi

Assuming the 90 days trading horizon Campina Ice is expected to generate 127.8 times less return on investment than Pratama Abadi. In addition to that, Campina Ice is 1.18 times more volatile than Pratama Abadi Nusa. It trades about 0.0 of its total potential returns per unit of risk. Pratama Abadi Nusa is currently generating about 0.14 per unit of volatility. If you would invest  469,000  in Pratama Abadi Nusa on September 28, 2024 and sell it today you would earn a total of  1,151,000  from holding Pratama Abadi Nusa or generate 245.42% return on investment over 90 days.

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

Campina Ice Cream  vs.  Pratama Abadi Nusa

Campina Ice Cream

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Campina Ice Cream 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pratama Abadi Nusa

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pratama Abadi Nusa are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pratama Abadi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Campina Ice and Pratama Abadi

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

The idea behind Campina Ice Cream and Pratama Abadi Nusa 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.