Correlation Between Citra Borneo and Putra Rajawali

Can any of the company-specific risk be diversified away by investing in both Citra Borneo and Putra Rajawali 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 Putra Rajawali 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 Putra Rajawali Kencana, you can compare the effects of market volatilities on Citra Borneo and Putra Rajawali 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 Putra Rajawali. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citra Borneo and Putra Rajawali.

Diversification Opportunities for Citra Borneo and Putra Rajawali

0.52

Correlation Coefficient

Citra Borneo  Putra Rajawali

Very weak diversification

The 3 months correlation between Citra and Putra is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citra Borneo Utama and Putra Rajawali Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putra Rajawali Kencana 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 Putra Rajawali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putra Rajawali Kencana has no effect on the direction of Citra Borneo i.e., Citra Borneo and Putra Rajawali go up and down completely randomly.

Pair Corralation between Citra Borneo and Putra Rajawali

Assuming the 90 days trading horizon Citra Borneo Utama is expected to generate 1.05 times more return on investment than Putra Rajawali. However, Citra Borneo is 1.05 times more volatile than Putra Rajawali Kencana. It trades about -0.01 of its potential returns per unit of risk. Putra Rajawali Kencana is currently generating about -0.04 per unit of risk. If you would invest  197,476  in Citra Borneo Utama on October 25, 2024 and sell it today you would lose (87,976) from holding Citra Borneo Utama or give up 44.55% of portfolio value over 90 days.

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

Citra Borneo Utama  vs.  Putra Rajawali Kencana

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 quite persistent forward-looking signals, Citra Borneo is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Putra Rajawali Kencana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putra Rajawali Kencana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Putra Rajawali 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 Citra Borneo and Putra Rajawali

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

The idea behind Citra Borneo Utama and Putra Rajawali Kencana 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.