Correlation Between Armada Berjaya and Kioson Komersial

Can any of the company-specific risk be diversified away by investing in both Armada Berjaya and Kioson Komersial 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 Armada Berjaya and Kioson Komersial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Berjaya Trans and Kioson Komersial Indonesia, you can compare the effects of market volatilities on Armada Berjaya and Kioson Komersial 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 Armada Berjaya with a short position of Kioson Komersial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Berjaya and Kioson Komersial.

Diversification Opportunities for Armada Berjaya and Kioson Komersial

0.28

Correlation Coefficient

Armada Berjaya  Kioson Komersial

Modest diversification

The 3 months correlation between Armada and Kioson is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Armada Berjaya Trans and Kioson Komersial Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kioson Komersial Ind and Armada Berjaya 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 Armada Berjaya Trans are associated (or correlated) with Kioson Komersial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kioson Komersial Ind has no effect on the direction of Armada Berjaya i.e., Armada Berjaya and Kioson Komersial go up and down completely randomly.

Pair Corralation between Armada Berjaya and Kioson Komersial

Assuming the 90 days trading horizon Armada Berjaya Trans is expected to under-perform the Kioson Komersial. But the stock apears to be less risky and, when comparing its historical volatility, Armada Berjaya Trans is 1.9 times less risky than Kioson Komersial. The stock trades about -0.09 of its potential returns per unit of risk. The Kioson Komersial Indonesia is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,000  in Kioson Komersial Indonesia on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Kioson Komersial Indonesia or generate 0.0% return on investment over 90 days.

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

Armada Berjaya Trans  vs.  Kioson Komersial Indonesia

Armada Berjaya Trans

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Berjaya Trans 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.

Kioson Komersial Ind

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kioson Komersial Indonesia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kioson Komersial 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 Armada Berjaya and Kioson Komersial

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

The idea behind Armada Berjaya Trans and Kioson Komersial Indonesia 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.