Correlation Between Cipta Selera and PT Indo

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

By analyzing existing cross correlation between Cipta Selera Murni and PT Indo Boga, you can compare the effects of market volatilities on Cipta Selera and PT Indo 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 Cipta Selera with a short position of PT Indo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cipta Selera and PT Indo.

Diversification Opportunities for Cipta Selera and PT Indo

-0.77

Correlation Coefficient

Cipta Selera  PT Indo

Pay attention - limited upside

The 3 months correlation between Cipta and IBOS is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cipta Selera Murni and PT Indo Boga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Boga and Cipta Selera 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 Cipta Selera Murni are associated (or correlated) with PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Boga has no effect on the direction of Cipta Selera i.e., Cipta Selera and PT Indo go up and down completely randomly.

Pair Corralation between Cipta Selera and PT Indo

Assuming the 90 days trading horizon Cipta Selera Murni is expected to generate 0.35 times more return on investment than PT Indo. However, Cipta Selera Murni is 2.88 times less risky than PT Indo. It trades about 0.06 of its potential returns per unit of risk. PT Indo Boga is currently generating about -0.11 per unit of risk. If you would invest  269,000  in Cipta Selera Murni on October 10, 2024 and sell it today you would earn a total of  30,000  from holding Cipta Selera Murni or generate 11.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

Cipta Selera Murni  vs.  PT Indo Boga

Cipta Selera Murni

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cipta Selera Murni are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Cipta Selera may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PT Indo Boga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indo Boga 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Cipta Selera and PT Indo

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

The idea behind Cipta Selera Murni and PT Indo Boga 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.