Correlation Between Central Proteina and Kawasan Industri

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

By analyzing existing cross correlation between Central Proteina Prima and Kawasan Industri Jababeka, you can compare the effects of market volatilities on Central Proteina and Kawasan Industri 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 Central Proteina with a short position of Kawasan Industri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Proteina and Kawasan Industri.

Diversification Opportunities for Central Proteina and Kawasan Industri

0.16

Correlation Coefficient

Central Proteina  Kawasan Industri

Average diversification

The 3 months correlation between Central and Kawasan is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Central Proteina Prima and Kawasan Industri Jababeka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawasan Industri Jababeka and Central Proteina 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 Central Proteina Prima are associated (or correlated) with Kawasan Industri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawasan Industri Jababeka has no effect on the direction of Central Proteina i.e., Central Proteina and Kawasan Industri go up and down completely randomly.

Pair Corralation between Central Proteina and Kawasan Industri

Assuming the 90 days trading horizon Central Proteina is expected to generate 9.79 times less return on investment than Kawasan Industri. In addition to that, Central Proteina is 1.16 times more volatile than Kawasan Industri Jababeka. It trades about 0.0 of its total potential returns per unit of risk. Kawasan Industri Jababeka is currently generating about 0.04 per unit of volatility. If you would invest  14,100  in Kawasan Industri Jababeka on October 7, 2024 and sell it today you would earn a total of  4,800  from holding Kawasan Industri Jababeka or generate 34.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Central Proteina Prima  vs.  Kawasan Industri Jababeka

Central Proteina Prima

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kawasan Industri Jababeka

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kawasan Industri Jababeka are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kawasan Industri 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 Central Proteina and Kawasan Industri

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

The idea behind Central Proteina Prima and Kawasan Industri Jababeka 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.