Correlation Between Karya Bersama and Maha Properti

Can any of the company-specific risk be diversified away by investing in both Karya Bersama and Maha Properti 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 Karya Bersama and Maha Properti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Karya Bersama Anugerah and Maha Properti Indonesia, you can compare the effects of market volatilities on Karya Bersama and Maha Properti 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 Karya Bersama with a short position of Maha Properti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karya Bersama and Maha Properti.

Diversification Opportunities for Karya Bersama and Maha Properti

-0.02

Correlation Coefficient

Karya Bersama  Maha Properti

Good diversification

The 3 months correlation between Karya and Maha is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Karya Bersama Anugerah and Maha Properti Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maha Properti Indonesia and Karya Bersama 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 Karya Bersama Anugerah are associated (or correlated) with Maha Properti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maha Properti Indonesia has no effect on the direction of Karya Bersama i.e., Karya Bersama and Maha Properti go up and down completely randomly.

Pair Corralation between Karya Bersama and Maha Properti

Assuming the 90 days trading horizon Karya Bersama Anugerah is expected to generate 1.49 times more return on investment than Maha Properti. However, Karya Bersama is 1.49 times more volatile than Maha Properti Indonesia. It trades about 0.16 of its potential returns per unit of risk. Maha Properti Indonesia is currently generating about 0.13 per unit of risk. If you would invest  900.00  in Karya Bersama Anugerah on September 14, 2024 and sell it today you would earn a total of  1,200  from holding Karya Bersama Anugerah or generate 133.33% return on investment over 90 days.

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

Karya Bersama Anugerah  vs.  Maha Properti Indonesia

Karya Bersama Anugerah

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Karya Bersama Anugerah are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Karya Bersama may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Maha Properti Indonesia

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Maha Properti Indonesia are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Maha Properti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Karya Bersama and Maha Properti

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

The idea behind Karya Bersama Anugerah and Maha Properti Indonesia 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.