Correlation Between Citatah Tbk and Bhuwanatala Indah

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

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

Diversification Opportunities for Citatah Tbk and Bhuwanatala Indah

-0.56

Correlation Coefficient

Citatah Tbk  Bhuwanatala Indah

Excellent diversification

The 3 months correlation between Citatah and Bhuwanatala is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citatah Tbk and Bhuwanatala Indah Permai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhuwanatala Indah Permai and Citatah Tbk 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 Citatah Tbk are associated (or correlated) with Bhuwanatala Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhuwanatala Indah Permai has no effect on the direction of Citatah Tbk i.e., Citatah Tbk and Bhuwanatala Indah go up and down completely randomly.

Pair Corralation between Citatah Tbk and Bhuwanatala Indah

Assuming the 90 days trading horizon Citatah Tbk is expected to under-perform the Bhuwanatala Indah. In addition to that, Citatah Tbk is 1.2 times more volatile than Bhuwanatala Indah Permai. It trades about -0.04 of its total potential returns per unit of risk. Bhuwanatala Indah Permai is currently generating about -0.03 per unit of volatility. If you would invest  5,000  in Bhuwanatala Indah Permai on September 12, 2024 and sell it today you would lose (1,800) from holding Bhuwanatala Indah Permai or give up 36.0% of portfolio value over 90 days.

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

Citatah Tbk  vs.  Bhuwanatala Indah Permai

Citatah Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citatah Tbk 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bhuwanatala Indah Permai

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bhuwanatala Indah Permai are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bhuwanatala Indah disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citatah Tbk and Bhuwanatala Indah

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

The idea behind Citatah Tbk and Bhuwanatala Indah Permai 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.