Correlation Between Bakrie Sumatera and Central Proteina

Can any of the company-specific risk be diversified away by investing in both Bakrie Sumatera and Central Proteina 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 Bakrie Sumatera and Central Proteina into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bakrie Sumatera Plantations and Central Proteina Prima, you can compare the effects of market volatilities on Bakrie Sumatera and Central Proteina 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 Bakrie Sumatera with a short position of Central Proteina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakrie Sumatera and Central Proteina.

Diversification Opportunities for Bakrie Sumatera and Central Proteina

0.02

Correlation Coefficient

Bakrie Sumatera  Central Proteina

Significant diversification

The 3 months correlation between Bakrie and Central is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bakrie Sumatera Plantations and Central Proteina Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Proteina Prima and Bakrie Sumatera 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 Bakrie Sumatera Plantations are associated (or correlated) with Central Proteina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Proteina Prima has no effect on the direction of Bakrie Sumatera i.e., Bakrie Sumatera and Central Proteina go up and down completely randomly.

Pair Corralation between Bakrie Sumatera and Central Proteina

Assuming the 90 days trading horizon Bakrie Sumatera Plantations is expected to under-perform the Central Proteina. In addition to that, Bakrie Sumatera is 2.56 times more volatile than Central Proteina Prima. It trades about -0.12 of its total potential returns per unit of risk. Central Proteina Prima is currently generating about -0.07 per unit of volatility. If you would invest  5,100  in Central Proteina Prima on December 2, 2024 and sell it today you would lose (100.00) from holding Central Proteina Prima or give up 1.96% of portfolio value over 90 days.

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

Bakrie Sumatera Plantations  vs.  Central Proteina Prima

Bakrie Sumatera Plan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bakrie Sumatera Plantations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Central Proteina Prima

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Central Proteina Prima are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Central Proteina 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 Bakrie Sumatera and Central Proteina

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

The idea behind Bakrie Sumatera Plantations and Central Proteina Prima 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.