Correlation Between Sentul City and Intiland Development

Can any of the company-specific risk be diversified away by investing in both Sentul City and Intiland Development 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 Sentul City and Intiland Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sentul City Tbk and Intiland Development Tbk, you can compare the effects of market volatilities on Sentul City and Intiland Development 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 Sentul City with a short position of Intiland Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentul City and Intiland Development.

Diversification Opportunities for Sentul City and Intiland Development

0.43

Correlation Coefficient

Sentul City  Intiland Development

Very weak diversification

The 3 months correlation between Sentul and Intiland is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sentul City Tbk and Intiland Development Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intiland Development Tbk and Sentul City 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 Sentul City Tbk are associated (or correlated) with Intiland Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intiland Development Tbk has no effect on the direction of Sentul City i.e., Sentul City and Intiland Development go up and down completely randomly.

Pair Corralation between Sentul City and Intiland Development

Assuming the 90 days trading horizon Sentul City Tbk is expected to generate 1.38 times more return on investment than Intiland Development. However, Sentul City is 1.38 times more volatile than Intiland Development Tbk. It trades about 0.09 of its potential returns per unit of risk. Intiland Development Tbk is currently generating about -0.09 per unit of risk. If you would invest  4,200  in Sentul City Tbk on September 2, 2024 and sell it today you would earn a total of  600.00  from holding Sentul City Tbk or generate 14.29% return on investment over 90 days.

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

Sentul City Tbk  vs.  Intiland Development Tbk

Sentul City Tbk

Risk-Adjusted Performance

7 of 100

OK

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

Intiland Development Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intiland Development 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 Sentul City and Intiland Development

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

The idea behind Sentul City Tbk and Intiland Development 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.