Correlation Between Bima Sakti and Meta Epsi

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

Diversification Opportunities for Bima Sakti and Meta Epsi

0.35

Correlation Coefficient

Bima Sakti  Meta Epsi

Weak diversification

The 3 months correlation between Bima and Meta is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi and Meta Epsi Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Epsi 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 Meta Epsi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Epsi Tbk has no effect on the direction of Bima Sakti i.e., Bima Sakti and Meta Epsi go up and down completely randomly.

Pair Corralation between Bima Sakti and Meta Epsi

Assuming the 90 days trading horizon Bima Sakti Pertiwi is expected to generate 0.33 times more return on investment than Meta Epsi. However, Bima Sakti Pertiwi is 3.0 times less risky than Meta Epsi. It trades about -0.01 of its potential returns per unit of risk. Meta Epsi Tbk is currently generating about -0.15 per unit of risk. If you would invest  5,200  in Bima Sakti Pertiwi on September 3, 2024 and sell it today you would lose (100.00) from holding Bima Sakti Pertiwi or give up 1.92% of portfolio value over 90 days.

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

Bima Sakti Pertiwi  vs.  Meta Epsi Tbk

Bima Sakti Pertiwi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Meta Epsi Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meta Epsi Tbk 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bima Sakti and Meta Epsi

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

The idea behind Bima Sakti Pertiwi and Meta Epsi 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.