Correlation Between Campina Ice and Mulia Boga

Can any of the company-specific risk be diversified away by investing in both Campina Ice and Mulia Boga 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 Campina Ice and Mulia Boga into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Campina Ice Cream and Mulia Boga Raya, you can compare the effects of market volatilities on Campina Ice and Mulia Boga 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 Campina Ice with a short position of Mulia Boga. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campina Ice and Mulia Boga.

Diversification Opportunities for Campina Ice and Mulia Boga

-0.52

Correlation Coefficient

Campina Ice  Mulia Boga

Excellent diversification

The 3 months correlation between Campina and Mulia is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Campina Ice Cream and Mulia Boga Raya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mulia Boga Raya and Campina Ice 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 Campina Ice Cream are associated (or correlated) with Mulia Boga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mulia Boga Raya has no effect on the direction of Campina Ice i.e., Campina Ice and Mulia Boga go up and down completely randomly.

Pair Corralation between Campina Ice and Mulia Boga

Assuming the 90 days trading horizon Campina Ice Cream is expected to under-perform the Mulia Boga. But the stock apears to be less risky and, when comparing its historical volatility, Campina Ice Cream is 3.68 times less risky than Mulia Boga. The stock trades about -0.18 of its potential returns per unit of risk. The Mulia Boga Raya is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  148,500  in Mulia Boga Raya on September 14, 2024 and sell it today you would earn a total of  42,500  from holding Mulia Boga Raya or generate 28.62% return on investment over 90 days.

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

Campina Ice Cream  vs.  Mulia Boga Raya

Campina Ice Cream

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Campina Ice Cream 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.

Mulia Boga Raya

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mulia Boga Raya are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Mulia Boga disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Campina Ice and Mulia Boga

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

The idea behind Campina Ice Cream and Mulia Boga Raya 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.