Correlation Between Diagnos Laboratorium and PT Sunter

Can any of the company-specific risk be diversified away by investing in both Diagnos Laboratorium and PT Sunter 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 Diagnos Laboratorium and PT Sunter into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diagnos Laboratorium Utama and PT Sunter Lakeside, you can compare the effects of market volatilities on Diagnos Laboratorium and PT Sunter 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 Diagnos Laboratorium with a short position of PT Sunter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diagnos Laboratorium and PT Sunter.

Diversification Opportunities for Diagnos Laboratorium and PT Sunter

-0.27

Correlation Coefficient

Diagnos Laboratorium  PT Sunter

Very good diversification

The 3 months correlation between Diagnos and SNLK is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Diagnos Laboratorium Utama and PT Sunter Lakeside in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sunter Lakeside and Diagnos Laboratorium 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 Diagnos Laboratorium Utama are associated (or correlated) with PT Sunter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sunter Lakeside has no effect on the direction of Diagnos Laboratorium i.e., Diagnos Laboratorium and PT Sunter go up and down completely randomly.

Pair Corralation between Diagnos Laboratorium and PT Sunter

Assuming the 90 days trading horizon Diagnos Laboratorium Utama is expected to under-perform the PT Sunter. But the stock apears to be less risky and, when comparing its historical volatility, Diagnos Laboratorium Utama is 1.15 times less risky than PT Sunter. The stock trades about -0.12 of its potential returns per unit of risk. The PT Sunter Lakeside is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  52,500  in PT Sunter Lakeside on September 3, 2024 and sell it today you would earn a total of  16,000  from holding PT Sunter Lakeside or generate 30.48% return on investment over 90 days.

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

Diagnos Laboratorium Utama  vs.  PT Sunter Lakeside

Diagnos Laboratorium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diagnos Laboratorium Utama 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PT Sunter Lakeside

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Sunter Lakeside are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Sunter disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diagnos Laboratorium and PT Sunter

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

The idea behind Diagnos Laboratorium Utama and PT Sunter Lakeside 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.