Correlation Between Bima Sakti and Karya Bersama

Can any of the company-specific risk be diversified away by investing in both Bima Sakti and Karya Bersama 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 Karya Bersama 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 Karya Bersama Anugerah, you can compare the effects of market volatilities on Bima Sakti and Karya Bersama 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 Karya Bersama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bima Sakti and Karya Bersama.

Diversification Opportunities for Bima Sakti and Karya Bersama

0.96

Correlation Coefficient

Bima Sakti  Karya Bersama

Almost no diversification

The 3 months correlation between Bima and Karya is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi and Karya Bersama Anugerah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karya Bersama Anugerah 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 Karya Bersama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karya Bersama Anugerah has no effect on the direction of Bima Sakti i.e., Bima Sakti and Karya Bersama go up and down completely randomly.

Pair Corralation between Bima Sakti and Karya Bersama

Assuming the 90 days trading horizon Bima Sakti is expected to generate 1.93 times less return on investment than Karya Bersama. But when comparing it to its historical volatility, Bima Sakti Pertiwi is 1.64 times less risky than Karya Bersama. It trades about 0.21 of its potential returns per unit of risk. Karya Bersama Anugerah is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,100  in Karya Bersama Anugerah on December 30, 2024 and sell it today you would earn a total of  1,600  from holding Karya Bersama Anugerah or generate 76.19% return on investment over 90 days.

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

Bima Sakti Pertiwi  vs.  Karya Bersama Anugerah

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.

Karya Bersama Anugerah

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Karya Bersama Anugerah are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Karya Bersama disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bima Sakti and Karya Bersama

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

The idea behind Bima Sakti Pertiwi and Karya Bersama Anugerah 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.