Correlation Between Kawasan Industri and Total Bangun

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

By analyzing existing cross correlation between Kawasan Industri Jababeka and Total Bangun Persada, you can compare the effects of market volatilities on Kawasan Industri and Total 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 Kawasan Industri with a short position of Total Bangun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasan Industri and Total Bangun.

Diversification Opportunities for Kawasan Industri and Total Bangun

0.9

Correlation Coefficient

Kawasan Industri  Total Bangun

Almost no diversification

The 3 months correlation between Kawasan and Total is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka and Total Bangun Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Bangun Persada and Kawasan Industri 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 Kawasan Industri Jababeka are associated (or correlated) with Total Bangun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Bangun Persada has no effect on the direction of Kawasan Industri i.e., Kawasan Industri and Total Bangun go up and down completely randomly.

Pair Corralation between Kawasan Industri and Total Bangun

Assuming the 90 days trading horizon Kawasan Industri Jababeka is expected to generate 0.52 times more return on investment than Total Bangun. However, Kawasan Industri Jababeka is 1.94 times less risky than Total Bangun. It trades about -0.05 of its potential returns per unit of risk. Total Bangun Persada is currently generating about -0.11 per unit of risk. If you would invest  18,600  in Kawasan Industri Jababeka on December 30, 2024 and sell it today you would lose (700.00) from holding Kawasan Industri Jababeka or give up 3.76% of portfolio value over 90 days.

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

Kawasan Industri Jababeka  vs.  Total Bangun Persada

Kawasan Industri Jababeka

Risk-Adjusted Performance

Very Weak

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

Total Bangun Persada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Total Bangun Persada 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kawasan Industri and Total Bangun

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

The idea behind Kawasan Industri Jababeka and Total Bangun Persada 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.