Correlation Between Asuransi Bintang and Equity Development

Can any of the company-specific risk be diversified away by investing in both Asuransi Bintang and Equity Development 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 Equity Development 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 Equity Development Investment, you can compare the effects of market volatilities on Asuransi Bintang and Equity Development 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 Equity Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asuransi Bintang and Equity Development.

Diversification Opportunities for Asuransi Bintang and Equity Development

-0.18

Correlation Coefficient

Asuransi Bintang  Equity Development

Good diversification

The 3 months correlation between Asuransi and Equity is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Asuransi Bintang Tbk and Equity Development Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Development 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 Equity Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Development has no effect on the direction of Asuransi Bintang i.e., Asuransi Bintang and Equity Development go up and down completely randomly.

Pair Corralation between Asuransi Bintang and Equity Development

Assuming the 90 days trading horizon Asuransi Bintang Tbk is expected to under-perform the Equity Development. In addition to that, Asuransi Bintang is 3.08 times more volatile than Equity Development Investment. It trades about -0.15 of its total potential returns per unit of risk. Equity Development Investment is currently generating about 0.1 per unit of volatility. If you would invest  5,400  in Equity Development Investment on September 14, 2024 and sell it today you would earn a total of  300.00  from holding Equity Development Investment or generate 5.56% return on investment over 90 days.

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

Asuransi Bintang Tbk  vs.  Equity Development Investment

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.

Equity Development

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Development Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Equity Development may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Asuransi Bintang and Equity Development

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

The idea behind Asuransi Bintang Tbk and Equity Development Investment 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.