Correlation Between Pacific Strategic and Surya Permata

Can any of the company-specific risk be diversified away by investing in both Pacific Strategic and Surya Permata 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 Pacific Strategic and Surya Permata into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacific Strategic Financial and Surya Permata Andalan, you can compare the effects of market volatilities on Pacific Strategic and Surya Permata 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 Pacific Strategic with a short position of Surya Permata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Strategic and Surya Permata.

Diversification Opportunities for Pacific Strategic and Surya Permata

0.8

Correlation Coefficient

Pacific Strategic  Surya Permata

Very poor diversification

The 3 months correlation between Pacific and Surya is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Strategic Financial and Surya Permata Andalan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Permata Andalan and Pacific Strategic 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 Pacific Strategic Financial are associated (or correlated) with Surya Permata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Permata Andalan has no effect on the direction of Pacific Strategic i.e., Pacific Strategic and Surya Permata go up and down completely randomly.

Pair Corralation between Pacific Strategic and Surya Permata

Assuming the 90 days trading horizon Pacific Strategic Financial is expected to generate 0.43 times more return on investment than Surya Permata. However, Pacific Strategic Financial is 2.33 times less risky than Surya Permata. It trades about 0.3 of its potential returns per unit of risk. Surya Permata Andalan is currently generating about 0.07 per unit of risk. If you would invest  102,000  in Pacific Strategic Financial on November 29, 2024 and sell it today you would earn a total of  23,000  from holding Pacific Strategic Financial or generate 22.55% return on investment over 90 days.

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

Pacific Strategic Financial  vs.  Surya Permata Andalan

Pacific Strategic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Strategic Financial are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pacific Strategic disclosed solid returns over the last few months and may actually be approaching a breakup point.

Surya Permata Andalan

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Surya Permata Andalan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Surya Permata may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Pacific Strategic and Surya Permata

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

The idea behind Pacific Strategic Financial and Surya Permata Andalan 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .