Correlation Between Communication Cable and Surya Fajar

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

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

Diversification Opportunities for Communication Cable and Surya Fajar

-0.63

Correlation Coefficient

Communication Cable  Surya Fajar

Excellent diversification

The 3 months correlation between Communication and Surya is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Communication Cable Systems and Surya Fajar Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Fajar Capital and Communication Cable 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 Communication Cable Systems are associated (or correlated) with Surya Fajar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Fajar Capital has no effect on the direction of Communication Cable i.e., Communication Cable and Surya Fajar go up and down completely randomly.

Pair Corralation between Communication Cable and Surya Fajar

Assuming the 90 days trading horizon Communication Cable Systems is expected to under-perform the Surya Fajar. In addition to that, Communication Cable is 17.69 times more volatile than Surya Fajar Capital. It trades about -0.04 of its total potential returns per unit of risk. Surya Fajar Capital is currently generating about 0.12 per unit of volatility. If you would invest  181,500  in Surya Fajar Capital on September 3, 2024 and sell it today you would earn a total of  3,000  from holding Surya Fajar Capital or generate 1.65% return on investment over 90 days.

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

Communication Cable Systems  vs.  Surya Fajar Capital

Communication Cable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Communication Cable Systems 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.

Surya Fajar Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surya Fajar Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Surya Fajar 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 Communication Cable and Surya Fajar

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

The idea behind Communication Cable Systems and Surya Fajar Capital 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.