Correlation Between Asahimas Flat and Summarecon Agung

Can any of the company-specific risk be diversified away by investing in both Asahimas Flat and Summarecon Agung 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 Asahimas Flat and Summarecon Agung into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asahimas Flat Glass and Summarecon Agung Tbk, you can compare the effects of market volatilities on Asahimas Flat and Summarecon Agung 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 Asahimas Flat with a short position of Summarecon Agung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahimas Flat and Summarecon Agung.

Diversification Opportunities for Asahimas Flat and Summarecon Agung

0.63

Correlation Coefficient

Asahimas Flat  Summarecon Agung

Poor diversification

The 3 months correlation between Asahimas and Summarecon is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Asahimas Flat Glass and Summarecon Agung Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summarecon Agung Tbk and Asahimas Flat 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 Asahimas Flat Glass are associated (or correlated) with Summarecon Agung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summarecon Agung Tbk has no effect on the direction of Asahimas Flat i.e., Asahimas Flat and Summarecon Agung go up and down completely randomly.

Pair Corralation between Asahimas Flat and Summarecon Agung

Assuming the 90 days trading horizon Asahimas Flat Glass is expected to generate 0.32 times more return on investment than Summarecon Agung. However, Asahimas Flat Glass is 3.14 times less risky than Summarecon Agung. It trades about -0.04 of its potential returns per unit of risk. Summarecon Agung Tbk is currently generating about -0.07 per unit of risk. If you would invest  470,000  in Asahimas Flat Glass on September 2, 2024 and sell it today you would lose (10,000) from holding Asahimas Flat Glass or give up 2.13% of portfolio value over 90 days.

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

Asahimas Flat Glass  vs.  Summarecon Agung Tbk

Asahimas Flat Glass

Risk-Adjusted Performance

0 of 100

Very Weak

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

Summarecon Agung Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summarecon Agung 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 Asahimas Flat and Summarecon Agung

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

The idea behind Asahimas Flat Glass and Summarecon Agung 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.