Correlation Between Asuransi Dayin and Asuransi Bintang

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

By analyzing existing cross correlation between Asuransi Dayin Mitra and Asuransi Bintang Tbk, you can compare the effects of market volatilities on Asuransi Dayin and Asuransi Bintang 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 Asuransi Dayin with a short position of Asuransi Bintang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asuransi Dayin and Asuransi Bintang.

Diversification Opportunities for Asuransi Dayin and Asuransi Bintang

0.01

Correlation Coefficient

Asuransi Dayin  Asuransi Bintang

Significant diversification

The 3 months correlation between Asuransi and Asuransi is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Asuransi Dayin Mitra and Asuransi Bintang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Bintang Tbk and Asuransi Dayin 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 Asuransi Dayin Mitra are associated (or correlated) with Asuransi Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Bintang Tbk has no effect on the direction of Asuransi Dayin i.e., Asuransi Dayin and Asuransi Bintang go up and down completely randomly.

Pair Corralation between Asuransi Dayin and Asuransi Bintang

Assuming the 90 days trading horizon Asuransi Dayin Mitra is expected to under-perform the Asuransi Bintang. But the stock apears to be less risky and, when comparing its historical volatility, Asuransi Dayin Mitra is 3.05 times less risky than Asuransi Bintang. The stock trades about -0.1 of its potential returns per unit of risk. The Asuransi Bintang Tbk is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  72,000  in Asuransi Bintang Tbk on February 3, 2024 and sell it today you would earn a total of  10,000  from holding Asuransi Bintang Tbk or generate 13.89% return on investment over 90 days.

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

Asuransi Dayin Mitra  vs.  Asuransi Bintang Tbk

Asuransi Dayin Mitra

Risk-Adjusted Performance

0 of 100

Very Weak

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

Asuransi Bintang Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asuransi Bintang Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asuransi Bintang disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asuransi Dayin and Asuransi Bintang

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

The idea behind Asuransi Dayin Mitra and Asuransi Bintang Tbk 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.