Correlation Between Sepatu Bata and Ever Shine

Can any of the company-specific risk be diversified away by investing in both Sepatu Bata and Ever Shine 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 Sepatu Bata and Ever Shine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sepatu Bata Tbk and Ever Shine Textile, you can compare the effects of market volatilities on Sepatu Bata and Ever Shine 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 Sepatu Bata with a short position of Ever Shine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sepatu Bata and Ever Shine.

Diversification Opportunities for Sepatu Bata and Ever Shine

-0.52

Correlation Coefficient

Sepatu Bata  Ever Shine

Excellent diversification

The 3 months correlation between Sepatu and Ever is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sepatu Bata Tbk and Ever Shine Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ever Shine Textile and Sepatu Bata 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 Sepatu Bata Tbk are associated (or correlated) with Ever Shine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ever Shine Textile has no effect on the direction of Sepatu Bata i.e., Sepatu Bata and Ever Shine go up and down completely randomly.

Pair Corralation between Sepatu Bata and Ever Shine

Assuming the 90 days trading horizon Sepatu Bata Tbk is expected to under-perform the Ever Shine. But the stock apears to be less risky and, when comparing its historical volatility, Sepatu Bata Tbk is 2.0 times less risky than Ever Shine. The stock trades about -0.18 of its potential returns per unit of risk. The Ever Shine Textile is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,700  in Ever Shine Textile on September 4, 2024 and sell it today you would earn a total of  700.00  from holding Ever Shine Textile or generate 18.92% return on investment over 90 days.

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

Sepatu Bata Tbk  vs.  Ever Shine Textile

Sepatu Bata Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sepatu Bata Tbk 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ever Shine Textile

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ever Shine Textile are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Ever Shine disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sepatu Bata and Ever Shine

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

The idea behind Sepatu Bata Tbk and Ever Shine Textile 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.