Correlation Between Asuransi Harta and Asuransi Bintang

Can any of the company-specific risk be diversified away by investing in both Asuransi Harta 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 Harta 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 Harta Aman and Asuransi Bintang Tbk, you can compare the effects of market volatilities on Asuransi Harta 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 Harta with a short position of Asuransi Bintang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asuransi Harta and Asuransi Bintang.

Diversification Opportunities for Asuransi Harta and Asuransi Bintang

0.17

Correlation Coefficient

Asuransi Harta  Asuransi Bintang

Average diversification

The 3 months correlation between Asuransi and Asuransi is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Asuransi Harta Aman 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 Harta 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 Harta Aman 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 Harta i.e., Asuransi Harta and Asuransi Bintang go up and down completely randomly.

Pair Corralation between Asuransi Harta and Asuransi Bintang

Assuming the 90 days trading horizon Asuransi Harta Aman is expected to under-perform the Asuransi Bintang. But the stock apears to be less risky and, when comparing its historical volatility, Asuransi Harta Aman is 1.04 times less risky than Asuransi Bintang. The stock trades about -0.45 of its potential returns per unit of risk. The Asuransi Bintang Tbk is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  80,500  in Asuransi Bintang Tbk on February 11, 2024 and sell it today you would earn a total of  14,000  from holding Asuransi Bintang Tbk or generate 17.39% return on investment over 90 days.

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

Asuransi Harta Aman  vs.  Asuransi Bintang Tbk

Asuransi Harta Aman

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asuransi Harta Aman are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asuransi Harta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Asuransi Bintang Tbk

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asuransi Bintang Tbk are ranked lower than 10 (%) 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 Harta and Asuransi Bintang

The main advantage of trading using opposite Asuransi Harta and Asuransi Bintang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asuransi Harta 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 Harta Aman 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.