Correlation Between Asuransi Bintang and Pacific Strategic

Can any of the company-specific risk be diversified away by investing in both Asuransi Bintang and Pacific Strategic 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 Asuransi Bintang and Pacific Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Asuransi Bintang and Pacific Strategic

0.2

Correlation Coefficient

Asuransi Bintang  Pacific Strategic

Modest diversification

The 3 months correlation between Asuransi and Pacific is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Asuransi Bintang Tbk and Pacific Strategic Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Strategic and Asuransi Bintang 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 Asuransi Bintang Tbk are associated (or correlated) with Pacific Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Strategic has no effect on the direction of Asuransi Bintang i.e., Asuransi Bintang and Pacific Strategic go up and down completely randomly.

Pair Corralation between Asuransi Bintang and Pacific Strategic

Assuming the 90 days trading horizon Asuransi Bintang Tbk is expected to under-perform the Pacific Strategic. In addition to that, Asuransi Bintang is 3.6 times more volatile than Pacific Strategic Financial. It trades about -0.13 of its total potential returns per unit of risk. Pacific Strategic Financial is currently generating about 0.06 per unit of volatility. If you would invest  104,000  in Pacific Strategic Financial on September 14, 2024 and sell it today you would earn a total of  5,000  from holding Pacific Strategic Financial or generate 4.81% return on investment over 90 days.

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

Asuransi Bintang Tbk  vs.  Pacific Strategic Financial

Asuransi Bintang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asuransi Bintang Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pacific Strategic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Strategic Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Pacific Strategic 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 Asuransi Bintang and Pacific Strategic

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

The idea behind Asuransi Bintang Tbk and Pacific Strategic Financial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.