Correlation Between Capital Financial and Cowell Development

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

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

Diversification Opportunities for Capital Financial and Cowell Development

0.0

Correlation Coefficient

Capital Financial  Cowell Development

Pay attention - limited upside

The 3 months correlation between Capital and Cowell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Capital Financial Indonesia and Cowell Development Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cowell Development Tbk and Capital Financial 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 Capital Financial Indonesia are associated (or correlated) with Cowell Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cowell Development Tbk has no effect on the direction of Capital Financial i.e., Capital Financial and Cowell Development go up and down completely randomly.

Pair Corralation between Capital Financial and Cowell Development

If you would invest  53,500  in Capital Financial Indonesia on October 25, 2024 and sell it today you would earn a total of  4,500  from holding Capital Financial Indonesia or generate 8.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Capital Financial Indonesia  vs.  Cowell Development Tbk

Capital Financial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Financial Indonesia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Capital Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cowell Development Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Capital Financial Indonesia and Cowell Development 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.