Correlation Between CRH PLC and PT Berkah

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

By analyzing existing cross correlation between CRH PLC ADR and PT Berkah Beton, you can compare the effects of market volatilities on CRH PLC and PT Berkah 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 CRH PLC with a short position of PT Berkah. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRH PLC and PT Berkah.

Diversification Opportunities for CRH PLC and PT Berkah

0.0

Correlation Coefficient

CRH PLC  PT Berkah

Pay attention - limited upside

The 3 months correlation between CRH and BHBSY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CRH PLC ADR and PT Berkah Beton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Berkah Beton and CRH PLC 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 CRH PLC ADR are associated (or correlated) with PT Berkah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Berkah Beton has no effect on the direction of CRH PLC i.e., CRH PLC and PT Berkah go up and down completely randomly.

Pair Corralation between CRH PLC and PT Berkah

Considering the 90-day investment horizon CRH PLC ADR is expected to generate 0.61 times more return on investment than PT Berkah. However, CRH PLC ADR is 1.64 times less risky than PT Berkah. It trades about 0.12 of its potential returns per unit of risk. PT Berkah Beton is currently generating about -0.09 per unit of risk. If you would invest  4,715  in CRH PLC ADR on September 14, 2024 and sell it today you would earn a total of  5,140  from holding CRH PLC ADR or generate 109.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CRH PLC ADR  vs.  PT Berkah Beton

CRH PLC ADR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CRH PLC ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, CRH PLC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Berkah Beton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Berkah Beton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, PT Berkah is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CRH PLC and PT Berkah

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

The idea behind CRH PLC ADR and PT Berkah Beton 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.