Correlation Between Pesona Metro and CB Industrial

Can any of the company-specific risk be diversified away by investing in both Pesona Metro and CB Industrial 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 Pesona Metro and CB Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pesona Metro Holdings and CB Industrial Product, you can compare the effects of market volatilities on Pesona Metro and CB Industrial 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 Pesona Metro with a short position of CB Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pesona Metro and CB Industrial.

Diversification Opportunities for Pesona Metro and CB Industrial

0.11

Correlation Coefficient

Pesona Metro  CB Industrial

Average diversification

The 3 months correlation between Pesona and 7076 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Pesona Metro Holdings and CB Industrial Product in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CB Industrial Product and Pesona Metro 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 Pesona Metro Holdings are associated (or correlated) with CB Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CB Industrial Product has no effect on the direction of Pesona Metro i.e., Pesona Metro and CB Industrial go up and down completely randomly.

Pair Corralation between Pesona Metro and CB Industrial

Assuming the 90 days trading horizon Pesona Metro Holdings is expected to generate 1.71 times more return on investment than CB Industrial. However, Pesona Metro is 1.71 times more volatile than CB Industrial Product. It trades about 0.17 of its potential returns per unit of risk. CB Industrial Product is currently generating about -0.01 per unit of risk. If you would invest  24.00  in Pesona Metro Holdings on September 24, 2024 and sell it today you would earn a total of  7.00  from holding Pesona Metro Holdings or generate 29.17% return on investment over 90 days.

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

Pesona Metro Holdings  vs.  CB Industrial Product

Pesona Metro Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pesona Metro Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Pesona Metro disclosed solid returns over the last few months and may actually be approaching a breakup point.

CB Industrial Product

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CB Industrial Product has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CB Industrial 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 Pesona Metro and CB Industrial

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

The idea behind Pesona Metro Holdings and CB Industrial Product 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.