Correlation Between PT Indonesia and Bintang Mitra

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

By analyzing existing cross correlation between PT Indonesia Kendaraan and Bintang Mitra Semestaraya, you can compare the effects of market volatilities on PT Indonesia and Bintang Mitra 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 Indonesia with a short position of Bintang Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indonesia and Bintang Mitra.

Diversification Opportunities for PT Indonesia and Bintang Mitra

-0.62

Correlation Coefficient

PT Indonesia  Bintang Mitra

Excellent diversification

The 3 months correlation between IPCC and Bintang is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding PT Indonesia Kendaraan and Bintang Mitra Semestaraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Mitra Semestaraya and PT Indonesia 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 Indonesia Kendaraan are associated (or correlated) with Bintang Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Mitra Semestaraya has no effect on the direction of PT Indonesia i.e., PT Indonesia and Bintang Mitra go up and down completely randomly.

Pair Corralation between PT Indonesia and Bintang Mitra

Assuming the 90 days trading horizon PT Indonesia Kendaraan is expected to under-perform the Bintang Mitra. In addition to that, PT Indonesia is 1.41 times more volatile than Bintang Mitra Semestaraya. It trades about -0.14 of its total potential returns per unit of risk. Bintang Mitra Semestaraya is currently generating about -0.07 per unit of volatility. If you would invest  32,000  in Bintang Mitra Semestaraya on October 7, 2024 and sell it today you would lose (400.00) from holding Bintang Mitra Semestaraya or give up 1.25% of portfolio value over 90 days.

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

PT Indonesia Kendaraan  vs.  Bintang Mitra Semestaraya

PT Indonesia Kendaraan

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indonesia Kendaraan are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Indonesia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bintang Mitra Semestaraya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bintang Mitra Semestaraya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bintang Mitra 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 PT Indonesia and Bintang Mitra

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

The idea behind PT Indonesia Kendaraan and Bintang Mitra Semestaraya 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.