Correlation Between Vulcan Materials and PT Berkah

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

By analyzing existing cross correlation between Vulcan Materials and PT Berkah Beton, you can compare the effects of market volatilities on Vulcan Materials and PT Berkah 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 Vulcan Materials with a short position of PT Berkah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and PT Berkah.

Diversification Opportunities for Vulcan Materials and PT Berkah

0.0

Correlation Coefficient

Vulcan Materials  PT Berkah

Pay attention - limited upside

The 3 months correlation between Vulcan and BHBSY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and PT Berkah Beton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Berkah Beton and Vulcan Materials 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 Vulcan Materials are associated (or correlated) with PT Berkah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Berkah Beton has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and PT Berkah go up and down completely randomly.

Pair Corralation between Vulcan Materials and PT Berkah

Considering the 90-day investment horizon Vulcan Materials is expected to generate 0.53 times more return on investment than PT Berkah. However, Vulcan Materials is 1.89 times less risky than PT Berkah. It trades about 0.07 of its potential returns per unit of risk. PT Berkah Beton is currently generating about -0.09 per unit of risk. If you would invest  19,262  in Vulcan Materials on September 14, 2024 and sell it today you would earn a total of  8,549  from holding Vulcan Materials or generate 44.38% return on investment over 90 days.

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

Vulcan Materials  vs.  PT Berkah Beton

Vulcan Materials

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Vulcan Materials exhibited solid returns over the last few months and may actually be approaching a breakup point.

PT Berkah Beton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Berkah Beton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, PT Berkah is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vulcan Materials and PT Berkah

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

The idea behind Vulcan Materials and PT Berkah Beton 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.