Correlation Between Hoffmen Cleanindo and Bank Central

Can any of the company-specific risk be diversified away by investing in both Hoffmen Cleanindo and Bank Central 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 Hoffmen Cleanindo and Bank Central into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hoffmen Cleanindo and Bank Central Asia, you can compare the effects of market volatilities on Hoffmen Cleanindo and Bank Central 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 Hoffmen Cleanindo with a short position of Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoffmen Cleanindo and Bank Central.

Diversification Opportunities for Hoffmen Cleanindo and Bank Central

-0.66

Correlation Coefficient

Hoffmen Cleanindo  Bank Central

Excellent diversification

The 3 months correlation between Hoffmen and Bank is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hoffmen Cleanindo and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia and Hoffmen Cleanindo 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 Hoffmen Cleanindo are associated (or correlated) with Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of Hoffmen Cleanindo i.e., Hoffmen Cleanindo and Bank Central go up and down completely randomly.

Pair Corralation between Hoffmen Cleanindo and Bank Central

Assuming the 90 days trading horizon Hoffmen Cleanindo is expected to generate 1.37 times more return on investment than Bank Central. However, Hoffmen Cleanindo is 1.37 times more volatile than Bank Central Asia. It trades about 0.22 of its potential returns per unit of risk. Bank Central Asia is currently generating about -0.07 per unit of risk. If you would invest  14,100  in Hoffmen Cleanindo on December 29, 2024 and sell it today you would earn a total of  5,600  from holding Hoffmen Cleanindo or generate 39.72% return on investment over 90 days.

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

Hoffmen Cleanindo  vs.  Bank Central Asia

Hoffmen Cleanindo

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hoffmen Cleanindo are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Hoffmen Cleanindo disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bank Central Asia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Central Asia 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 Hoffmen Cleanindo and Bank Central

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

The idea behind Hoffmen Cleanindo and Bank Central Asia 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..