Correlation Between Cisarua Mountain and Champ Resto

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

By analyzing existing cross correlation between Cisarua Mountain Dairy and Champ Resto Indonesia, you can compare the effects of market volatilities on Cisarua Mountain and Champ Resto 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 Cisarua Mountain with a short position of Champ Resto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisarua Mountain and Champ Resto.

Diversification Opportunities for Cisarua Mountain and Champ Resto

0.27

Correlation Coefficient

Cisarua Mountain  Champ Resto

Modest diversification

The 3 months correlation between Cisarua and Champ is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cisarua Mountain Dairy and Champ Resto Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champ Resto Indonesia and Cisarua Mountain 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 Cisarua Mountain Dairy are associated (or correlated) with Champ Resto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champ Resto Indonesia has no effect on the direction of Cisarua Mountain i.e., Cisarua Mountain and Champ Resto go up and down completely randomly.

Pair Corralation between Cisarua Mountain and Champ Resto

Assuming the 90 days trading horizon Cisarua Mountain Dairy is expected to under-perform the Champ Resto. But the stock apears to be less risky and, when comparing its historical volatility, Cisarua Mountain Dairy is 2.07 times less risky than Champ Resto. The stock trades about -0.1 of its potential returns per unit of risk. The Champ Resto Indonesia is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  84,000  in Champ Resto Indonesia on December 30, 2024 and sell it today you would lose (14,000) from holding Champ Resto Indonesia or give up 16.67% of portfolio value over 90 days.

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

Cisarua Mountain Dairy  vs.  Champ Resto Indonesia

Cisarua Mountain Dairy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cisarua Mountain Dairy 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Champ Resto Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champ Resto Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Cisarua Mountain and Champ Resto

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

The idea behind Cisarua Mountain Dairy and Champ Resto Indonesia 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.