Correlation Between Sariguna Primatirta and Medikaloka Hermina

Can any of the company-specific risk be diversified away by investing in both Sariguna Primatirta and Medikaloka Hermina 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 Sariguna Primatirta and Medikaloka Hermina into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sariguna Primatirta PT and Medikaloka Hermina PT, you can compare the effects of market volatilities on Sariguna Primatirta and Medikaloka Hermina 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 Sariguna Primatirta with a short position of Medikaloka Hermina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sariguna Primatirta and Medikaloka Hermina.

Diversification Opportunities for Sariguna Primatirta and Medikaloka Hermina

0.41

Correlation Coefficient

Sariguna Primatirta  Medikaloka Hermina

Very weak diversification

The 3 months correlation between Sariguna and Medikaloka is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sariguna Primatirta PT and Medikaloka Hermina PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medikaloka Hermina and Sariguna Primatirta 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 Sariguna Primatirta PT are associated (or correlated) with Medikaloka Hermina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medikaloka Hermina has no effect on the direction of Sariguna Primatirta i.e., Sariguna Primatirta and Medikaloka Hermina go up and down completely randomly.

Pair Corralation between Sariguna Primatirta and Medikaloka Hermina

Assuming the 90 days trading horizon Sariguna Primatirta PT is expected to generate 1.15 times more return on investment than Medikaloka Hermina. However, Sariguna Primatirta is 1.15 times more volatile than Medikaloka Hermina PT. It trades about 0.15 of its potential returns per unit of risk. Medikaloka Hermina PT is currently generating about 0.03 per unit of risk. If you would invest  64,247  in Sariguna Primatirta PT on October 3, 2024 and sell it today you would earn a total of  93,253  from holding Sariguna Primatirta PT or generate 145.15% return on investment over 90 days.

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

Sariguna Primatirta PT  vs.  Medikaloka Hermina PT

Sariguna Primatirta

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sariguna Primatirta PT are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sariguna Primatirta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Medikaloka Hermina

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Medikaloka Hermina PT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Medikaloka Hermina may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sariguna Primatirta and Medikaloka Hermina

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

The idea behind Sariguna Primatirta PT and Medikaloka Hermina PT 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.