Correlation Between Optima Prima and Capital Financial
Can any of the company-specific risk be diversified away by investing in both Optima Prima and Capital Financial 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 Optima Prima and Capital Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optima Prima Metal and Capital Financial Indonesia, you can compare the effects of market volatilities on Optima Prima and Capital Financial 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 Optima Prima with a short position of Capital Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Prima and Capital Financial.
Diversification Opportunities for Optima Prima and Capital Financial
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optima and Capital is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Optima Prima Metal and Capital Financial Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Financial and Optima 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 Optima Prima Metal are associated (or correlated) with Capital Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Financial has no effect on the direction of Optima Prima i.e., Optima Prima and Capital Financial go up and down completely randomly.
Pair Corralation between Optima Prima and Capital Financial
Assuming the 90 days trading horizon Optima Prima Metal is expected to under-perform the Capital Financial. In addition to that, Optima Prima is 1.46 times more volatile than Capital Financial Indonesia. It trades about -0.04 of its total potential returns per unit of risk. Capital Financial Indonesia is currently generating about -0.02 per unit of volatility. If you would invest 72,500 in Capital Financial Indonesia on August 25, 2024 and sell it today you would lose (21,500) from holding Capital Financial Indonesia or give up 29.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Prima Metal vs. Capital Financial Indonesia
Performance |
| Timeline |
| Optima Prima Metal |
| Capital Financial |
Optima Prima and Capital Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Prima and Capital Financial
The main advantage of trading using opposite Optima Prima and Capital Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Prima position performs unexpectedly, Capital Financial 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 Capital Financial will offset losses from the drop in Capital Financial's long position.| Optima Prima vs. Emdeki Utama Tbk | Optima Prima vs. Nusantara Almazia | Optima Prima vs. Sentral Mitra Informatika | Optima Prima vs. Integra Indocabinet Tbk |
| Capital Financial vs. Paninvest Tbk | Capital Financial vs. Maskapai Reasuransi Indonesia | Capital Financial vs. Panin Sekuritas Tbk | Capital Financial vs. Wahana Ottomitra Multiartha |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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