Correlation Between Karya Bersama and Citra Borneo

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

By analyzing existing cross correlation between Karya Bersama Anugerah and Citra Borneo Utama, you can compare the effects of market volatilities on Karya Bersama and Citra Borneo 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 Karya Bersama with a short position of Citra Borneo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karya Bersama and Citra Borneo.

Diversification Opportunities for Karya Bersama and Citra Borneo

0.03

Correlation Coefficient

Karya Bersama  Citra Borneo

Significant diversification

The 3 months correlation between Karya and Citra is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Karya Bersama Anugerah and Citra Borneo Utama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citra Borneo Utama and Karya Bersama 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 Karya Bersama Anugerah are associated (or correlated) with Citra Borneo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citra Borneo Utama has no effect on the direction of Karya Bersama i.e., Karya Bersama and Citra Borneo go up and down completely randomly.

Pair Corralation between Karya Bersama and Citra Borneo

Assuming the 90 days trading horizon Karya Bersama Anugerah is expected to under-perform the Citra Borneo. But the stock apears to be less risky and, when comparing its historical volatility, Karya Bersama Anugerah is 1.29 times less risky than Citra Borneo. The stock trades about -0.04 of its potential returns per unit of risk. The Citra Borneo Utama is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  184,079  in Citra Borneo Utama on October 9, 2024 and sell it today you would lose (84,579) from holding Citra Borneo Utama or give up 45.95% of portfolio value over 90 days.

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

Karya Bersama Anugerah  vs.  Citra Borneo Utama

Karya Bersama Anugerah

Risk-Adjusted Performance

0 of 100

Very Weak

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

Citra Borneo Utama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citra Borneo Utama 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Karya Bersama and Citra Borneo

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

The idea behind Karya Bersama Anugerah and Citra Borneo Utama 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.