Correlation Between Capital Financial and Surya Permata

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

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

Diversification Opportunities for Capital Financial and Surya Permata

-0.5

Correlation Coefficient

Capital Financial  Surya Permata

Very good diversification

The 3 months correlation between Capital and Surya is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Capital Financial Indonesia 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 Capital Financial 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 Capital Financial Indonesia 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 Capital Financial i.e., Capital Financial and Surya Permata go up and down completely randomly.

Pair Corralation between Capital Financial and Surya Permata

Assuming the 90 days trading horizon Capital Financial Indonesia is expected to under-perform the Surya Permata. In addition to that, Capital Financial is 1.27 times more volatile than Surya Permata Andalan. It trades about -0.15 of its total potential returns per unit of risk. Surya Permata Andalan is currently generating about -0.14 per unit of volatility. If you would invest  14,100  in Surya Permata Andalan on August 31, 2024 and sell it today you would lose (700.00) from holding Surya Permata Andalan or give up 4.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Capital Financial Indonesia  vs.  Surya Permata Andalan

Capital Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Financial Indonesia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Capital Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Surya Permata Andalan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surya Permata Andalan 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 Capital Financial and Surya Permata

The main advantage of trading using opposite Capital Financial and Surya Permata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Financial 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 Capital Financial Indonesia 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 Commodity Directory module to find actively traded commodities issued by global exchanges.