Correlation Between Karya Bersama and Diamond Citra

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

Diversification Opportunities for Karya Bersama and Diamond Citra

-0.61

Correlation Coefficient

Karya Bersama  Diamond Citra

Excellent diversification

The 3 months correlation between Karya and Diamond is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Karya Bersama Anugerah and Diamond Citra Propertindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Citra Propertindo 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 Diamond Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Citra Propertindo has no effect on the direction of Karya Bersama i.e., Karya Bersama and Diamond Citra go up and down completely randomly.

Pair Corralation between Karya Bersama and Diamond Citra

Assuming the 90 days trading horizon Karya Bersama Anugerah is expected to generate 0.54 times more return on investment than Diamond Citra. However, Karya Bersama Anugerah is 1.86 times less risky than Diamond Citra. It trades about 0.25 of its potential returns per unit of risk. Diamond Citra Propertindo is currently generating about 0.01 per unit of risk. If you would invest  2,100  in Karya Bersama Anugerah on December 30, 2024 and sell it today you would earn a total of  1,600  from holding Karya Bersama Anugerah or generate 76.19% return on investment over 90 days.

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

Karya Bersama Anugerah  vs.  Diamond Citra Propertindo

Karya Bersama Anugerah

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Karya Bersama Anugerah are ranked lower than 19 (%) 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.

Diamond Citra Propertindo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Citra Propertindo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Diamond Citra 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 Karya Bersama and Diamond Citra

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

The idea behind Karya Bersama Anugerah and Diamond Citra Propertindo 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.