Correlation Between Cisadane Sawit and Triputra Agro

Can any of the company-specific risk be diversified away by investing in both Cisadane Sawit and Triputra Agro 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 Cisadane Sawit and Triputra Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cisadane Sawit Raya and Triputra Agro Persada, you can compare the effects of market volatilities on Cisadane Sawit and Triputra Agro 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 Cisadane Sawit with a short position of Triputra Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisadane Sawit and Triputra Agro.

Diversification Opportunities for Cisadane Sawit and Triputra Agro

-0.01

Correlation Coefficient

Cisadane Sawit  Triputra Agro

Good diversification

The 3 months correlation between Cisadane and Triputra is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cisadane Sawit Raya and Triputra Agro Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triputra Agro Persada and Cisadane Sawit 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 Cisadane Sawit Raya are associated (or correlated) with Triputra Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triputra Agro Persada has no effect on the direction of Cisadane Sawit i.e., Cisadane Sawit and Triputra Agro go up and down completely randomly.

Pair Corralation between Cisadane Sawit and Triputra Agro

Assuming the 90 days trading horizon Cisadane Sawit Raya is expected to under-perform the Triputra Agro. But the stock apears to be less risky and, when comparing its historical volatility, Cisadane Sawit Raya is 1.5 times less risky than Triputra Agro. The stock trades about -0.06 of its potential returns per unit of risk. The Triputra Agro Persada is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  86,500  in Triputra Agro Persada on December 4, 2024 and sell it today you would lose (2,500) from holding Triputra Agro Persada or give up 2.89% of portfolio value over 90 days.

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

Cisadane Sawit Raya  vs.  Triputra Agro Persada

Cisadane Sawit Raya

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cisadane Sawit Raya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Cisadane Sawit is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Triputra Agro Persada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Triputra Agro Persada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Triputra Agro 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 Cisadane Sawit and Triputra Agro

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

The idea behind Cisadane Sawit Raya and Triputra Agro Persada 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.