Correlation Between Berkah Prima and Agro Yasa

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

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

Diversification Opportunities for Berkah Prima and Agro Yasa

0.21

Correlation Coefficient

Berkah Prima  Agro Yasa

Modest diversification

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

Pair Corralation between Berkah Prima and Agro Yasa

Assuming the 90 days trading horizon Berkah Prima Perkasa is expected to under-perform the Agro Yasa. But the stock apears to be less risky and, when comparing its historical volatility, Berkah Prima Perkasa is 8.39 times less risky than Agro Yasa. The stock trades about -0.01 of its potential returns per unit of risk. The Agro Yasa Lestari is currently generating about 0.16 of returns per unit of risk over similar time horizon. 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

Berkah Prima Perkasa  vs.  Agro Yasa Lestari

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.

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.

Pair Trading with Berkah Prima and Agro Yasa

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

The idea behind Berkah Prima Perkasa and Agro Yasa Lestari 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.