Correlation Between Champion Pacific and Citra Marga

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

By analyzing existing cross correlation between Champion Pacific Indonesia and Citra Marga Nusaphala, you can compare the effects of market volatilities on Champion Pacific and Citra Marga 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 Champion Pacific with a short position of Citra Marga. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Pacific and Citra Marga.

Diversification Opportunities for Champion Pacific and Citra Marga

-0.12

Correlation Coefficient

Champion Pacific  Citra Marga

Good diversification

The 3 months correlation between Champion and Citra is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Champion Pacific Indonesia and Citra Marga Nusaphala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citra Marga Nusaphala and Champion Pacific 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 Champion Pacific Indonesia are associated (or correlated) with Citra Marga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citra Marga Nusaphala has no effect on the direction of Champion Pacific i.e., Champion Pacific and Citra Marga go up and down completely randomly.

Pair Corralation between Champion Pacific and Citra Marga

Assuming the 90 days trading horizon Champion Pacific is expected to generate 12.04 times less return on investment than Citra Marga. But when comparing it to its historical volatility, Champion Pacific Indonesia is 5.96 times less risky than Citra Marga. It trades about 0.03 of its potential returns per unit of risk. Citra Marga Nusaphala is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  140,000  in Citra Marga Nusaphala on December 31, 2024 and sell it today you would earn a total of  15,500  from holding Citra Marga Nusaphala or generate 11.07% return on investment over 90 days.

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

Champion Pacific Indonesia  vs.  Citra Marga Nusaphala

Champion Pacific Ind

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Champion Pacific Indonesia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Champion Pacific is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Citra Marga Nusaphala

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citra Marga Nusaphala are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Citra Marga disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Champion Pacific and Citra Marga

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

The idea behind Champion Pacific Indonesia and Citra Marga Nusaphala 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.