Correlation Between Sumber Alfaria and Asuransi Bina

Can any of the company-specific risk be diversified away by investing in both Sumber Alfaria and Asuransi Bina 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 Sumber Alfaria and Asuransi Bina into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sumber Alfaria Trijaya and Asuransi Bina Dana, you can compare the effects of market volatilities on Sumber Alfaria and Asuransi Bina 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 Sumber Alfaria with a short position of Asuransi Bina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Alfaria and Asuransi Bina.

Diversification Opportunities for Sumber Alfaria and Asuransi Bina

-0.16

Correlation Coefficient

Sumber Alfaria  Asuransi Bina

Good diversification

The 3 months correlation between Sumber and Asuransi is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Alfaria Trijaya and Asuransi Bina Dana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Bina Dana and Sumber Alfaria 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 Sumber Alfaria Trijaya are associated (or correlated) with Asuransi Bina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Bina Dana has no effect on the direction of Sumber Alfaria i.e., Sumber Alfaria and Asuransi Bina go up and down completely randomly.

Pair Corralation between Sumber Alfaria and Asuransi Bina

Assuming the 90 days trading horizon Sumber Alfaria Trijaya is expected to generate 1.7 times more return on investment than Asuransi Bina. However, Sumber Alfaria is 1.7 times more volatile than Asuransi Bina Dana. It trades about 0.04 of its potential returns per unit of risk. Asuransi Bina Dana is currently generating about -0.14 per unit of risk. If you would invest  255,431  in Sumber Alfaria Trijaya on September 12, 2024 and sell it today you would earn a total of  46,569  from holding Sumber Alfaria Trijaya or generate 18.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.72%
Values	Daily Returns

Sumber Alfaria Trijaya  vs.  Asuransi Bina Dana

Sumber Alfaria Trijaya

Risk-Adjusted Performance

0 of 100

Very Weak

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

Asuransi Bina Dana

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sumber Alfaria and Asuransi Bina

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

The idea behind Sumber Alfaria Trijaya and Asuransi Bina Dana 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..