Correlation Between Karya Bersama and Cisadane Sawit

Can any of the company-specific risk be diversified away by investing in both Karya Bersama and Cisadane Sawit 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 Cisadane Sawit 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 Cisadane Sawit Raya, you can compare the effects of market volatilities on Karya Bersama and Cisadane Sawit 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 Cisadane Sawit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karya Bersama and Cisadane Sawit.

Diversification Opportunities for Karya Bersama and Cisadane Sawit

-0.24

Correlation Coefficient

Karya Bersama  Cisadane Sawit

Very good diversification

The 3 months correlation between Karya and Cisadane is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Karya Bersama Anugerah and Cisadane Sawit Raya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisadane Sawit Raya 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 Cisadane Sawit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisadane Sawit Raya has no effect on the direction of Karya Bersama i.e., Karya Bersama and Cisadane Sawit go up and down completely randomly.

Pair Corralation between Karya Bersama and Cisadane Sawit

Assuming the 90 days trading horizon Karya Bersama Anugerah is expected to generate 2.82 times more return on investment than Cisadane Sawit. However, Karya Bersama is 2.82 times more volatile than Cisadane Sawit Raya. It trades about 0.17 of its potential returns per unit of risk. Cisadane Sawit Raya is currently generating about -0.11 per unit of risk. If you would invest  2,200  in Karya Bersama Anugerah on December 23, 2024 and sell it today you would earn a total of  900.00  from holding Karya Bersama Anugerah or generate 40.91% return on investment over 90 days.

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

Karya Bersama Anugerah  vs.  Cisadane Sawit Raya

Karya Bersama Anugerah

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Karya Bersama Anugerah are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Karya Bersama disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cisadane Sawit Raya

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cisadane Sawit Raya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Karya Bersama and Cisadane Sawit

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

The idea behind Karya Bersama Anugerah and Cisadane Sawit Raya 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.