Correlation Between Agro Yasa and Berkah Prima

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

By analyzing existing cross correlation between Agro Yasa Lestari and Berkah Prima Perkasa, you can compare the effects of market volatilities on Agro Yasa and Berkah Prima 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 Agro Yasa with a short position of Berkah Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Yasa and Berkah Prima.

Diversification Opportunities for Agro Yasa and Berkah Prima

0.21

Correlation Coefficient

Agro Yasa  Berkah Prima

Modest diversification

The 3 months correlation between Agro and Berkah is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Agro Yasa Lestari and Berkah Prima Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkah Prima Perkasa and Agro Yasa 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 Agro Yasa Lestari are associated (or correlated) with Berkah Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkah Prima Perkasa has no effect on the direction of Agro Yasa i.e., Agro Yasa and Berkah Prima go up and down completely randomly.

Pair Corralation between Agro Yasa and Berkah Prima

Assuming the 90 days trading horizon Agro Yasa Lestari is expected to generate 8.39 times more return on investment than Berkah Prima. However, Agro Yasa is 8.39 times more volatile than Berkah Prima Perkasa. It trades about 0.16 of its potential returns per unit of risk. Berkah Prima Perkasa is currently generating about -0.01 per unit of risk. If you would invest  6,700  in Agro Yasa Lestari on September 28, 2024 and sell it today you would earn a total of  7,400  from holding Agro Yasa Lestari or generate 110.45% return on investment over 90 days.

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

Agro Yasa Lestari  vs.  Berkah Prima Perkasa

Agro Yasa Lestari

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Yasa Lestari are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Agro Yasa disclosed solid returns over the last few months and may actually be approaching a breakup point.

Berkah Prima Perkasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berkah Prima Perkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Berkah Prima 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 Agro Yasa and Berkah Prima

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

The idea behind Agro Yasa Lestari and Berkah Prima Perkasa 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.