Correlation Between Sumber Alfaria and Avia Avian

Can any of the company-specific risk be diversified away by investing in both Sumber Alfaria and Avia Avian 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 Avia Avian 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 Avia Avian PT, you can compare the effects of market volatilities on Sumber Alfaria and Avia Avian 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 Avia Avian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Alfaria and Avia Avian.

Diversification Opportunities for Sumber Alfaria and Avia Avian

0.21

Correlation Coefficient

Sumber Alfaria  Avia Avian

Modest diversification

The 3 months correlation between Sumber and Avia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Alfaria Trijaya and Avia Avian PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avia Avian PT 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 Avia Avian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avia Avian PT has no effect on the direction of Sumber Alfaria i.e., Sumber Alfaria and Avia Avian go up and down completely randomly.

Pair Corralation between Sumber Alfaria and Avia Avian

Assuming the 90 days trading horizon Sumber Alfaria Trijaya is expected to under-perform the Avia Avian. In addition to that, Sumber Alfaria is 1.67 times more volatile than Avia Avian PT. It trades about -0.15 of its total potential returns per unit of risk. Avia Avian PT is currently generating about 0.02 per unit of volatility. If you would invest  40,000  in Avia Avian PT on December 30, 2024 and sell it today you would earn a total of  600.00  from holding Avia Avian PT or generate 1.5% return on investment over 90 days.

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

Sumber Alfaria Trijaya  vs.  Avia Avian PT

Sumber Alfaria Trijaya

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Avia Avian PT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Avia Avian PT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Avia Avian 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 Avia Avian

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

The idea behind Sumber Alfaria Trijaya and Avia Avian PT 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.