Correlation Between Argha Karya and Barito Pacific

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

By analyzing existing cross correlation between Argha Karya Prima and Barito Pacific Tbk, you can compare the effects of market volatilities on Argha Karya and Barito Pacific 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 Argha Karya with a short position of Barito Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argha Karya and Barito Pacific.

Diversification Opportunities for Argha Karya and Barito Pacific

-0.41

Correlation Coefficient

Argha Karya  Barito Pacific

Very good diversification

The 3 months correlation between Argha and Barito is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Argha Karya Prima and Barito Pacific Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barito Pacific Tbk and Argha Karya 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 Argha Karya Prima are associated (or correlated) with Barito Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barito Pacific Tbk has no effect on the direction of Argha Karya i.e., Argha Karya and Barito Pacific go up and down completely randomly.

Pair Corralation between Argha Karya and Barito Pacific

Assuming the 90 days trading horizon Argha Karya Prima is expected to under-perform the Barito Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Argha Karya Prima is 1.84 times less risky than Barito Pacific. The stock trades about -0.09 of its potential returns per unit of risk. The Barito Pacific Tbk is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  94,000  in Barito Pacific Tbk on February 23, 2024 and sell it today you would earn a total of  24,500  from holding Barito Pacific Tbk or generate 26.06% return on investment over 90 days.

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

Argha Karya Prima  vs.  Barito Pacific Tbk

Argha Karya Prima

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argha Karya Prima has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Barito Pacific Tbk

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barito Pacific Tbk are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Barito Pacific disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Argha Karya and Barito Pacific

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

The idea behind Argha Karya Prima and Barito Pacific 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.