Correlation Between Citra Borneo and PT Primadaya

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

By analyzing existing cross correlation between Citra Borneo Utama and PT Primadaya Plastisindo, you can compare the effects of market volatilities on Citra Borneo and PT Primadaya 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 Citra Borneo with a short position of PT Primadaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citra Borneo and PT Primadaya.

Diversification Opportunities for Citra Borneo and PT Primadaya

0.79

Correlation Coefficient

Citra Borneo  PT Primadaya

Poor diversification

The 3 months correlation between Citra and PDPP is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Citra Borneo Utama and PT Primadaya Plastisindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Primadaya Plastisindo and Citra Borneo 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 Citra Borneo Utama are associated (or correlated) with PT Primadaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Primadaya Plastisindo has no effect on the direction of Citra Borneo i.e., Citra Borneo and PT Primadaya go up and down completely randomly.

Pair Corralation between Citra Borneo and PT Primadaya

Assuming the 90 days trading horizon Citra Borneo Utama is expected to under-perform the PT Primadaya. But the stock apears to be less risky and, when comparing its historical volatility, Citra Borneo Utama is 1.1 times less risky than PT Primadaya. The stock trades about -0.11 of its potential returns per unit of risk. The PT Primadaya Plastisindo is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  60,500  in PT Primadaya Plastisindo on October 7, 2024 and sell it today you would lose (10,500) from holding PT Primadaya Plastisindo or give up 17.36% of portfolio value over 90 days.

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

Citra Borneo Utama  vs.  PT Primadaya Plastisindo

Citra Borneo Utama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citra Borneo Utama 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.

PT Primadaya Plastisindo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Primadaya Plastisindo 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 Citra Borneo and PT Primadaya

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

The idea behind Citra Borneo Utama and PT Primadaya Plastisindo 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.