Correlation Between Asiaplast Industries and Berlina Tbk

Can any of the company-specific risk be diversified away by investing in both Asiaplast Industries and Berlina Tbk 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 Asiaplast Industries and Berlina Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asiaplast Industries Tbk and Berlina Tbk, you can compare the effects of market volatilities on Asiaplast Industries and Berlina Tbk 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 Asiaplast Industries with a short position of Berlina Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiaplast Industries and Berlina Tbk.

Diversification Opportunities for Asiaplast Industries and Berlina Tbk

-0.06

Correlation Coefficient

Asiaplast Industries  Berlina Tbk

Good diversification

The 3 months correlation between Asiaplast and Berlina is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Asiaplast Industries Tbk and Berlina Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berlina Tbk and Asiaplast Industries 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 Asiaplast Industries Tbk are associated (or correlated) with Berlina Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berlina Tbk has no effect on the direction of Asiaplast Industries i.e., Asiaplast Industries and Berlina Tbk go up and down completely randomly.

Pair Corralation between Asiaplast Industries and Berlina Tbk

Assuming the 90 days trading horizon Asiaplast Industries Tbk is expected to under-perform the Berlina Tbk. But the stock apears to be less risky and, when comparing its historical volatility, Asiaplast Industries Tbk is 1.24 times less risky than Berlina Tbk. The stock trades about -0.02 of its potential returns per unit of risk. The Berlina Tbk is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  72,500  in Berlina Tbk on September 15, 2024 and sell it today you would lose (2,500) from holding Berlina Tbk or give up 3.45% of portfolio value over 90 days.

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

Asiaplast Industries Tbk  vs.  Berlina Tbk

Asiaplast Industries Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Berlina Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berlina Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Berlina Tbk 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 Asiaplast Industries and Berlina Tbk

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

The idea behind Asiaplast Industries Tbk and Berlina Tbk 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.