Correlation Between Berkah Prima and Galva Technologies

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

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

Diversification Opportunities for Berkah Prima and Galva Technologies

0.85

Correlation Coefficient

Berkah Prima  Galva Technologies

Very poor diversification

The 3 months correlation between Berkah and Galva is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Berkah Prima Perkasa and Galva Technologies Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galva Technologies Tbk and Berkah Prima 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 Berkah Prima Perkasa are associated (or correlated) with Galva Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galva Technologies Tbk has no effect on the direction of Berkah Prima i.e., Berkah Prima and Galva Technologies go up and down completely randomly.

Pair Corralation between Berkah Prima and Galva Technologies

Assuming the 90 days trading horizon Berkah Prima Perkasa is expected to generate 1.31 times more return on investment than Galva Technologies. However, Berkah Prima is 1.31 times more volatile than Galva Technologies Tbk. It trades about 0.07 of its potential returns per unit of risk. Galva Technologies Tbk is currently generating about -0.04 per unit of risk. If you would invest  33,200  in Berkah Prima Perkasa on March 11, 2024 and sell it today you would earn a total of  400.00  from holding Berkah Prima Perkasa or generate 1.2% return on investment over 90 days.

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

Berkah Prima Perkasa  vs.  Galva Technologies Tbk

Berkah Prima Perkasa

Risk-Adjusted Performance

0 of 100

Very Weak

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

Galva Technologies Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Berkah Prima and Galva Technologies

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

The idea behind Berkah Prima Perkasa and Galva Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.