Correlation Between Sentul City and Solusi Bangun

Can any of the company-specific risk be diversified away by investing in both Sentul City and Solusi Bangun 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 Solusi Bangun 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 Solusi Bangun Indonesia, you can compare the effects of market volatilities on Sentul City and Solusi Bangun 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 Solusi Bangun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentul City and Solusi Bangun.

Diversification Opportunities for Sentul City and Solusi Bangun

0.18

Correlation Coefficient

Sentul City  Solusi Bangun

Average diversification

The 3 months correlation between Sentul and Solusi is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sentul City Tbk and Solusi Bangun Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solusi Bangun Indonesia 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 Solusi Bangun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solusi Bangun Indonesia has no effect on the direction of Sentul City i.e., Sentul City and Solusi Bangun go up and down completely randomly.

Pair Corralation between Sentul City and Solusi Bangun

Assuming the 90 days trading horizon Sentul City Tbk is expected to generate 0.96 times more return on investment than Solusi Bangun. However, Sentul City Tbk is 1.05 times less risky than Solusi Bangun. It trades about 0.01 of its potential returns per unit of risk. Solusi Bangun Indonesia is currently generating about -0.04 per unit of risk. If you would invest  5,000  in Sentul City Tbk on September 3, 2024 and sell it today you would lose (200.00) from holding Sentul City Tbk or give up 4.0% of portfolio value over 90 days.

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

Sentul City Tbk  vs.  Solusi Bangun Indonesia

Sentul City Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sentul City Tbk are ranked lower than 8 (%) 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.

Solusi Bangun Indonesia

Risk-Adjusted Performance

1 of 100

Weak

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

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

The idea behind Sentul City Tbk and Solusi Bangun Indonesia 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.