Correlation Between PT Citra and Berlina Tbk

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

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

Diversification Opportunities for PT Citra and Berlina Tbk

0.49

Correlation Coefficient

PT Citra  Berlina Tbk

Very weak diversification

The 3 months correlation between CTBN and Berlina is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PT Citra Tubindo and Berlina Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berlina Tbk and PT Citra 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 Citra Tubindo are associated (or correlated) with Berlina Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berlina Tbk has no effect on the direction of PT Citra i.e., PT Citra and Berlina Tbk go up and down completely randomly.

Pair Corralation between PT Citra and Berlina Tbk

Assuming the 90 days trading horizon PT Citra Tubindo is expected to under-perform the Berlina Tbk. But the stock apears to be less risky and, when comparing its historical volatility, PT Citra Tubindo is 1.47 times less risky than Berlina Tbk. The stock trades about -0.24 of its potential returns per unit of risk. The Berlina Tbk is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  70,000  in Berlina Tbk on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Berlina Tbk or generate 0.0% return on investment over 90 days.

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

PT Citra Tubindo  vs.  Berlina Tbk

PT Citra Tubindo

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Citra Tubindo are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Citra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Berlina Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berlina Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Berlina Tbk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Citra and Berlina Tbk

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

The idea behind PT Citra Tubindo and Berlina Tbk 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.