Correlation Between Bima Sakti and Armidian Karyatama

Can any of the company-specific risk be diversified away by investing in both Bima Sakti and Armidian Karyatama 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 Bima Sakti and Armidian Karyatama into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bima Sakti Pertiwi and Armidian Karyatama Tbk, you can compare the effects of market volatilities on Bima Sakti and Armidian Karyatama 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 Bima Sakti with a short position of Armidian Karyatama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bima Sakti and Armidian Karyatama.

Diversification Opportunities for Bima Sakti and Armidian Karyatama

0.0

Correlation Coefficient

Bima Sakti  Armidian Karyatama

Pay attention - limited upside

The 3 months correlation between Bima and Armidian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi and Armidian Karyatama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armidian Karyatama Tbk and Bima Sakti 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 Bima Sakti Pertiwi are associated (or correlated) with Armidian Karyatama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armidian Karyatama Tbk has no effect on the direction of Bima Sakti i.e., Bima Sakti and Armidian Karyatama go up and down completely randomly.

Pair Corralation between Bima Sakti and Armidian Karyatama

If you would invest  5,100  in Bima Sakti Pertiwi on December 30, 2024 and sell it today you would earn a total of  1,800  from holding Bima Sakti Pertiwi or generate 35.29% return on investment over 90 days.

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

Bima Sakti Pertiwi  vs.  Armidian Karyatama Tbk

Bima Sakti Pertiwi

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bima Sakti Pertiwi are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bima Sakti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Armidian Karyatama Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armidian Karyatama Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Armidian Karyatama 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 Bima Sakti and Armidian Karyatama

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

The idea behind Bima Sakti Pertiwi and Armidian Karyatama 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.