Correlation Between Indo Pureco and Bintang Samudera

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

By analyzing existing cross correlation between Indo Pureco Pratama and Bintang Samudera Mandiri, you can compare the effects of market volatilities on Indo Pureco and Bintang Samudera 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 Indo Pureco with a short position of Bintang Samudera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Pureco and Bintang Samudera.

Diversification Opportunities for Indo Pureco and Bintang Samudera

0.0

Correlation Coefficient

Indo Pureco  Bintang Samudera

Pay attention - limited upside

The 3 months correlation between Indo and Bintang is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indo Pureco Pratama and Bintang Samudera Mandiri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Samudera Mandiri and Indo Pureco 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 Indo Pureco Pratama are associated (or correlated) with Bintang Samudera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Samudera Mandiri has no effect on the direction of Indo Pureco i.e., Indo Pureco and Bintang Samudera go up and down completely randomly.

Pair Corralation between Indo Pureco and Bintang Samudera

If you would invest  13,700  in Bintang Samudera Mandiri on October 27, 2024 and sell it today you would earn a total of  400.00  from holding Bintang Samudera Mandiri or generate 2.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Indo Pureco Pratama  vs.  Bintang Samudera Mandiri

Indo Pureco Pratama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indo Pureco Pratama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Indo Pureco is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bintang Samudera Mandiri

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Indo Pureco and Bintang Samudera

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

The idea behind Indo Pureco Pratama and Bintang Samudera Mandiri 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.