Correlation Between Pelita Samudera and Bhakti Multi

Can any of the company-specific risk be diversified away by investing in both Pelita Samudera and Bhakti Multi 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 Pelita Samudera and Bhakti Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pelita Samudera Shipping and Bhakti Multi Artha, you can compare the effects of market volatilities on Pelita Samudera and Bhakti Multi 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 Pelita Samudera with a short position of Bhakti Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pelita Samudera and Bhakti Multi.

Diversification Opportunities for Pelita Samudera and Bhakti Multi

-0.54

Correlation Coefficient

Pelita Samudera  Bhakti Multi

Excellent diversification

The 3 months correlation between Pelita and Bhakti is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pelita Samudera Shipping and Bhakti Multi Artha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhakti Multi Artha and Pelita Samudera 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 Pelita Samudera Shipping are associated (or correlated) with Bhakti Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhakti Multi Artha has no effect on the direction of Pelita Samudera i.e., Pelita Samudera and Bhakti Multi go up and down completely randomly.

Pair Corralation between Pelita Samudera and Bhakti Multi

Assuming the 90 days trading horizon Pelita Samudera Shipping is expected to under-perform the Bhakti Multi. In addition to that, Pelita Samudera is 1.09 times more volatile than Bhakti Multi Artha. It trades about -0.04 of its total potential returns per unit of risk. Bhakti Multi Artha is currently generating about 0.15 per unit of volatility. If you would invest  45,000  in Bhakti Multi Artha on December 21, 2024 and sell it today you would earn a total of  4,600  from holding Bhakti Multi Artha or generate 10.22% return on investment over 90 days.

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

Pelita Samudera Shipping  vs.  Bhakti Multi Artha

Pelita Samudera Shipping

Risk-Adjusted Performance

Very Weak

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

Bhakti Multi Artha

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bhakti Multi Artha are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bhakti Multi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pelita Samudera and Bhakti Multi

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

The idea behind Pelita Samudera Shipping and Bhakti Multi Artha 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.