Correlation Between PT Chemstar and PT Cilacap

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

By analyzing existing cross correlation between PT Chemstar Indonesia and PT Cilacap Samudera, you can compare the effects of market volatilities on PT Chemstar and PT Cilacap 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 PT Chemstar with a short position of PT Cilacap. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Chemstar and PT Cilacap.

Diversification Opportunities for PT Chemstar and PT Cilacap

0.2

Correlation Coefficient

PT Chemstar  PT Cilacap

Modest diversification

The 3 months correlation between CHEM and ASHA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PT Chemstar Indonesia and PT Cilacap Samudera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Cilacap Samudera and PT Chemstar 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 PT Chemstar Indonesia are associated (or correlated) with PT Cilacap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Cilacap Samudera has no effect on the direction of PT Chemstar i.e., PT Chemstar and PT Cilacap go up and down completely randomly.

Pair Corralation between PT Chemstar and PT Cilacap

Assuming the 90 days trading horizon PT Chemstar Indonesia is expected to under-perform the PT Cilacap. In addition to that, PT Chemstar is 1.0 times more volatile than PT Cilacap Samudera. It trades about -0.01 of its total potential returns per unit of risk. PT Cilacap Samudera is currently generating about 0.03 per unit of volatility. If you would invest  1,100  in PT Cilacap Samudera on December 19, 2024 and sell it today you would earn a total of  0.00  from holding PT Cilacap Samudera or generate 0.0% return on investment over 90 days.

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

PT Chemstar Indonesia  vs.  PT Cilacap Samudera

PT Chemstar Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Chemstar Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Chemstar is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PT Cilacap Samudera

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Cilacap Samudera are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Cilacap may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PT Chemstar and PT Cilacap

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

The idea behind PT Chemstar Indonesia and PT Cilacap Samudera 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 Commodity Directory module to find actively traded commodities issued by global exchanges.