Correlation Between Kabelindo Murni and Paramita Bangun

Can any of the company-specific risk be diversified away by investing in both Kabelindo Murni and Paramita Bangun 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 Kabelindo Murni and Paramita Bangun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kabelindo Murni Tbk and Paramita Bangun Sarana, you can compare the effects of market volatilities on Kabelindo Murni and Paramita Bangun 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 Kabelindo Murni with a short position of Paramita Bangun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kabelindo Murni and Paramita Bangun.

Diversification Opportunities for Kabelindo Murni and Paramita Bangun

-0.24

Correlation Coefficient

Kabelindo Murni  Paramita Bangun

Very good diversification

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

Pair Corralation between Kabelindo Murni and Paramita Bangun

Assuming the 90 days trading horizon Kabelindo Murni Tbk is expected to under-perform the Paramita Bangun. In addition to that, Kabelindo Murni is 1.09 times more volatile than Paramita Bangun Sarana. It trades about -0.03 of its total potential returns per unit of risk. Paramita Bangun Sarana is currently generating about 0.16 per unit of volatility. If you would invest  29,200  in Paramita Bangun Sarana on October 26, 2024 and sell it today you would earn a total of  6,600  from holding Paramita Bangun Sarana or generate 22.6% return on investment over 90 days.

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

Kabelindo Murni Tbk  vs.  Paramita Bangun Sarana

Kabelindo Murni Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Paramita Bangun Sarana

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paramita Bangun Sarana are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Paramita Bangun disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kabelindo Murni and Paramita Bangun

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

The idea behind Kabelindo Murni Tbk and Paramita Bangun Sarana 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.