Correlation Between Charnic Capital and Ciputra Development

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

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

Diversification Opportunities for Charnic Capital and Ciputra Development

-0.03

Correlation Coefficient

Charnic Capital  Ciputra Development

Good diversification

The 3 months correlation between Charnic and Ciputra is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Charnic Capital Tbk and Ciputra Development Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciputra Development Tbk and Charnic Capital 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 Charnic Capital Tbk are associated (or correlated) with Ciputra Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciputra Development Tbk has no effect on the direction of Charnic Capital i.e., Charnic Capital and Ciputra Development go up and down completely randomly.

Pair Corralation between Charnic Capital and Ciputra Development

Assuming the 90 days trading horizon Charnic Capital Tbk is expected to generate 0.52 times more return on investment than Ciputra Development. However, Charnic Capital Tbk is 1.92 times less risky than Ciputra Development. It trades about -0.05 of its potential returns per unit of risk. Ciputra Development Tbk is currently generating about -0.32 per unit of risk. If you would invest  63,000  in Charnic Capital Tbk on August 18, 2024 and sell it today you would lose (1,000.00) from holding Charnic Capital Tbk or give up 1.59% of portfolio value over 90 days.

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

Charnic Capital Tbk  vs.  Ciputra Development Tbk

Charnic Capital Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ciputra Development Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ciputra Development Tbk 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 Charnic Capital and Ciputra Development

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

The idea behind Charnic Capital Tbk and Ciputra Development 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.