Correlation Between Bhakti Multi and Surya Permata

Can any of the company-specific risk be diversified away by investing in both Bhakti Multi and Surya Permata 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 Bhakti Multi and Surya Permata into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bhakti Multi Artha and Surya Permata Andalan, you can compare the effects of market volatilities on Bhakti Multi and Surya Permata 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 Bhakti Multi with a short position of Surya Permata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bhakti Multi and Surya Permata.

Diversification Opportunities for Bhakti Multi and Surya Permata

0.84

Correlation Coefficient

Bhakti Multi  Surya Permata

Very poor diversification

The 3 months correlation between Bhakti and Surya is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bhakti Multi Artha and Surya Permata Andalan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Permata Andalan and Bhakti Multi 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 Bhakti Multi Artha are associated (or correlated) with Surya Permata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Permata Andalan has no effect on the direction of Bhakti Multi i.e., Bhakti Multi and Surya Permata go up and down completely randomly.

Pair Corralation between Bhakti Multi and Surya Permata

Assuming the 90 days trading horizon Bhakti Multi Artha is expected to generate 0.51 times more return on investment than Surya Permata. However, Bhakti Multi Artha is 1.94 times less risky than Surya Permata. It trades about -0.06 of its potential returns per unit of risk. Surya Permata Andalan is currently generating about -0.05 per unit of risk. If you would invest  88,000  in Bhakti Multi Artha on September 14, 2024 and sell it today you would lose (43,200) from holding Bhakti Multi Artha or give up 49.09% of portfolio value over 90 days.

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

Bhakti Multi Artha  vs.  Surya Permata Andalan

Bhakti Multi Artha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bhakti Multi Artha 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.

Surya Permata Andalan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surya Permata Andalan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Surya Permata 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 Bhakti Multi and Surya Permata

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

The idea behind Bhakti Multi Artha and Surya Permata Andalan 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.