Correlation Between Campina Ice and Surya Permata

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

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

Diversification Opportunities for Campina Ice and Surya Permata

-0.88

Correlation Coefficient

Campina Ice  Surya Permata

Pay attention - limited upside

The 3 months correlation between Campina and Surya is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Campina Ice Cream 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 Campina Ice 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 Campina Ice Cream 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 Campina Ice i.e., Campina Ice and Surya Permata go up and down completely randomly.

Pair Corralation between Campina Ice and Surya Permata

Assuming the 90 days trading horizon Campina Ice Cream is expected to under-perform the Surya Permata. But the stock apears to be less risky and, when comparing its historical volatility, Campina Ice Cream is 1.1 times less risky than Surya Permata. The stock trades about -0.3 of its potential returns per unit of risk. The Surya Permata Andalan is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14,500  in Surya Permata Andalan on November 29, 2024 and sell it today you would earn a total of  1,300  from holding Surya Permata Andalan or generate 8.97% return on investment over 90 days.

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

Campina Ice Cream  vs.  Surya Permata Andalan

Campina Ice Cream

Risk-Adjusted Performance

Very Weak

Over the last 90 days Campina Ice Cream 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 March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 Campina Ice and Surya Permata

The main advantage of trading using opposite Campina Ice and Surya Permata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Campina Ice 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 Campina Ice Cream 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.