Correlation Between Kedaung Indah and Berlina Tbk

Can any of the company-specific risk be diversified away by investing in both Kedaung Indah and Berlina Tbk 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 Kedaung Indah and Berlina Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kedaung Indah Can and Berlina Tbk, you can compare the effects of market volatilities on Kedaung Indah and Berlina Tbk 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 Kedaung Indah with a short position of Berlina Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedaung Indah and Berlina Tbk.

Diversification Opportunities for Kedaung Indah and Berlina Tbk

-0.15

Correlation Coefficient

Kedaung Indah  Berlina Tbk

Good diversification

The 3 months correlation between Kedaung and Berlina is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Kedaung Indah Can and Berlina Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berlina Tbk and Kedaung Indah 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 Kedaung Indah Can are associated (or correlated) with Berlina Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berlina Tbk has no effect on the direction of Kedaung Indah i.e., Kedaung Indah and Berlina Tbk go up and down completely randomly.

Pair Corralation between Kedaung Indah and Berlina Tbk

Assuming the 90 days trading horizon Kedaung Indah Can is expected to under-perform the Berlina Tbk. In addition to that, Kedaung Indah is 2.07 times more volatile than Berlina Tbk. It trades about -0.02 of its total potential returns per unit of risk. Berlina Tbk is currently generating about 0.01 per unit of volatility. If you would invest  70,000  in Berlina Tbk on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Berlina Tbk or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Kedaung Indah Can  vs.  Berlina Tbk

Kedaung Indah Can

Risk-Adjusted Performance

Very Weak

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

Berlina Tbk

Risk-Adjusted Performance

Weak

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

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

The idea behind Kedaung Indah Can and Berlina Tbk 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 Transaction History module to view history of all your transactions and understand their impact on performance.