Correlation Between PT Indonesia and Berlian Laju

Can any of the company-specific risk be diversified away by investing in both PT Indonesia and Berlian Laju 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 PT Indonesia and Berlian Laju into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Indonesia Kendaraan and Berlian Laju Tanker, you can compare the effects of market volatilities on PT Indonesia and Berlian Laju 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 PT Indonesia with a short position of Berlian Laju. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indonesia and Berlian Laju.

Diversification Opportunities for PT Indonesia and Berlian Laju

-0.06

Correlation Coefficient

PT Indonesia  Berlian Laju

Good diversification

The 3 months correlation between IPCC and Berlian is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding PT Indonesia Kendaraan and Berlian Laju Tanker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berlian Laju Tanker and PT Indonesia 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 PT Indonesia Kendaraan are associated (or correlated) with Berlian Laju. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berlian Laju Tanker has no effect on the direction of PT Indonesia i.e., PT Indonesia and Berlian Laju go up and down completely randomly.

Pair Corralation between PT Indonesia and Berlian Laju

Assuming the 90 days trading horizon PT Indonesia Kendaraan is expected to generate 0.35 times more return on investment than Berlian Laju. However, PT Indonesia Kendaraan is 2.9 times less risky than Berlian Laju. It trades about 0.11 of its potential returns per unit of risk. Berlian Laju Tanker is currently generating about 0.0 per unit of risk. If you would invest  65,709  in PT Indonesia Kendaraan on September 12, 2024 and sell it today you would earn a total of  6,291  from holding PT Indonesia Kendaraan or generate 9.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

PT Indonesia Kendaraan  vs.  Berlian Laju Tanker

PT Indonesia Kendaraan

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indonesia Kendaraan are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Indonesia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Berlian Laju Tanker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berlian Laju Tanker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Berlian Laju 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 PT Indonesia and Berlian Laju

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

The idea behind PT Indonesia Kendaraan and Berlian Laju Tanker 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.