Correlation Between Bima Sakti and Royalindo Investa

Can any of the company-specific risk be diversified away by investing in both Bima Sakti and Royalindo Investa 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 Bima Sakti and Royalindo Investa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bima Sakti Pertiwi and Royalindo Investa Wijaya, you can compare the effects of market volatilities on Bima Sakti and Royalindo Investa 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 Bima Sakti with a short position of Royalindo Investa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bima Sakti and Royalindo Investa.

Diversification Opportunities for Bima Sakti and Royalindo Investa

0.08

Correlation Coefficient

Bima Sakti  Royalindo Investa

Significant diversification

The 3 months correlation between Bima and Royalindo is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi and Royalindo Investa Wijaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalindo Investa Wijaya and Bima Sakti 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 Bima Sakti Pertiwi are associated (or correlated) with Royalindo Investa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalindo Investa Wijaya has no effect on the direction of Bima Sakti i.e., Bima Sakti and Royalindo Investa go up and down completely randomly.

Pair Corralation between Bima Sakti and Royalindo Investa

Assuming the 90 days trading horizon Bima Sakti Pertiwi is expected to generate 1.1 times more return on investment than Royalindo Investa. However, Bima Sakti is 1.1 times more volatile than Royalindo Investa Wijaya. It trades about 0.01 of its potential returns per unit of risk. Royalindo Investa Wijaya is currently generating about -0.09 per unit of risk. If you would invest  5,200  in Bima Sakti Pertiwi on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Bima Sakti Pertiwi or generate 0.0% return on investment over 90 days.

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

Bima Sakti Pertiwi  vs.  Royalindo Investa Wijaya

Bima Sakti Pertiwi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bima Sakti Pertiwi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bima Sakti is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Royalindo Investa Wijaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royalindo Investa Wijaya 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 Bima Sakti and Royalindo Investa

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

The idea behind Bima Sakti Pertiwi and Royalindo Investa Wijaya 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 Transaction History module to view history of all your transactions and understand their impact on performance.