Correlation Between PT Charlie and Bima Sakti

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

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

Diversification Opportunities for PT Charlie and Bima Sakti

0.37

Correlation Coefficient

PT Charlie  Bima Sakti

Weak diversification

The 3 months correlation between RSCH and Bima is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PT Charlie Hospital and Bima Sakti Pertiwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bima Sakti Pertiwi and PT Charlie 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 PT Charlie Hospital are associated (or correlated) with Bima Sakti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bima Sakti Pertiwi has no effect on the direction of PT Charlie i.e., PT Charlie and Bima Sakti go up and down completely randomly.

Pair Corralation between PT Charlie and Bima Sakti

Assuming the 90 days trading horizon PT Charlie Hospital is expected to generate 1.74 times more return on investment than Bima Sakti. However, PT Charlie is 1.74 times more volatile than Bima Sakti Pertiwi. It trades about 0.0 of its potential returns per unit of risk. Bima Sakti Pertiwi is currently generating about -0.01 per unit of risk. If you would invest  33,600  in PT Charlie Hospital on August 31, 2024 and sell it today you would lose (600.00) from holding PT Charlie Hospital or give up 1.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

PT Charlie Hospital  vs.  Bima Sakti Pertiwi

PT Charlie Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with PT Charlie and Bima Sakti

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

The idea behind PT Charlie Hospital and Bima Sakti Pertiwi 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.