Correlation Between Kawasan Industri and Citra Marga

Can any of the company-specific risk be diversified away by investing in both Kawasan Industri and Citra Marga 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 Kawasan Industri and Citra Marga into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kawasan Industri Jababeka and Citra Marga Nusaphala, you can compare the effects of market volatilities on Kawasan Industri and Citra Marga 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 Kawasan Industri with a short position of Citra Marga. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasan Industri and Citra Marga.

Diversification Opportunities for Kawasan Industri and Citra Marga

-0.8

Correlation Coefficient

Kawasan Industri  Citra Marga

Pay attention - limited upside

The 3 months correlation between Kawasan and Citra is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka and Citra Marga Nusaphala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citra Marga Nusaphala and Kawasan Industri 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 Kawasan Industri Jababeka are associated (or correlated) with Citra Marga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citra Marga Nusaphala has no effect on the direction of Kawasan Industri i.e., Kawasan Industri and Citra Marga go up and down completely randomly.

Pair Corralation between Kawasan Industri and Citra Marga

Assuming the 90 days trading horizon Kawasan Industri Jababeka is expected to generate 1.83 times more return on investment than Citra Marga. However, Kawasan Industri is 1.83 times more volatile than Citra Marga Nusaphala. It trades about 0.12 of its potential returns per unit of risk. Citra Marga Nusaphala is currently generating about -0.15 per unit of risk. If you would invest  18,200  in Kawasan Industri Jababeka on September 14, 2024 and sell it today you would earn a total of  1,700  from holding Kawasan Industri Jababeka or generate 9.34% return on investment over 90 days.

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

Kawasan Industri Jababeka  vs.  Citra Marga Nusaphala

Kawasan Industri Jababeka

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kawasan Industri Jababeka are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Kawasan Industri may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Citra Marga Nusaphala

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citra Marga Nusaphala has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Kawasan Industri and Citra Marga

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

The idea behind Kawasan Industri Jababeka and Citra Marga Nusaphala 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.