Correlation Between Alfa Energi and Cikarang Listrindo

Can any of the company-specific risk be diversified away by investing in both Alfa Energi and Cikarang Listrindo 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 Alfa Energi and Cikarang Listrindo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alfa Energi Investama and Cikarang Listrindo Tbk, you can compare the effects of market volatilities on Alfa Energi and Cikarang Listrindo 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 Alfa Energi with a short position of Cikarang Listrindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Energi and Cikarang Listrindo.

Diversification Opportunities for Alfa Energi and Cikarang Listrindo

-0.33

Correlation Coefficient

Alfa Energi  Cikarang Listrindo

Very good diversification

The 3 months correlation between Alfa and Cikarang is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Energi Investama and Cikarang Listrindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cikarang Listrindo Tbk and Alfa Energi 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 Alfa Energi Investama are associated (or correlated) with Cikarang Listrindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cikarang Listrindo Tbk has no effect on the direction of Alfa Energi i.e., Alfa Energi and Cikarang Listrindo go up and down completely randomly.

Pair Corralation between Alfa Energi and Cikarang Listrindo

Assuming the 90 days trading horizon Alfa Energi is expected to generate 14.65 times less return on investment than Cikarang Listrindo. In addition to that, Alfa Energi is 6.26 times more volatile than Cikarang Listrindo Tbk. It trades about 0.0 of its total potential returns per unit of risk. Cikarang Listrindo Tbk is currently generating about 0.07 per unit of volatility. If you would invest  53,067  in Cikarang Listrindo Tbk on September 14, 2024 and sell it today you would earn a total of  16,933  from holding Cikarang Listrindo Tbk or generate 31.91% return on investment over 90 days.

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

Alfa Energi Investama  vs.  Cikarang Listrindo Tbk

Alfa Energi Investama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Energi Investama 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.

Cikarang Listrindo Tbk

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cikarang Listrindo Tbk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Cikarang Listrindo 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 Alfa Energi and Cikarang Listrindo

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

The idea behind Alfa Energi Investama and Cikarang Listrindo 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.