Correlation Between Indointernet Tbk and Solusi Sinergi

Can any of the company-specific risk be diversified away by investing in both Indointernet Tbk and Solusi Sinergi 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 Indointernet Tbk and Solusi Sinergi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indointernet Tbk PT and Solusi Sinergi Digital, you can compare the effects of market volatilities on Indointernet Tbk and Solusi Sinergi 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 Indointernet Tbk with a short position of Solusi Sinergi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indointernet Tbk and Solusi Sinergi.

Diversification Opportunities for Indointernet Tbk and Solusi Sinergi

0.38

Correlation Coefficient

Indointernet Tbk  Solusi Sinergi

Weak diversification

The 3 months correlation between Indointernet and Solusi is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Indointernet Tbk PT and Solusi Sinergi Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solusi Sinergi Digital and Indointernet Tbk 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 Indointernet Tbk PT are associated (or correlated) with Solusi Sinergi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solusi Sinergi Digital has no effect on the direction of Indointernet Tbk i.e., Indointernet Tbk and Solusi Sinergi go up and down completely randomly.

Pair Corralation between Indointernet Tbk and Solusi Sinergi

Assuming the 90 days trading horizon Indointernet Tbk is expected to generate 4.06 times less return on investment than Solusi Sinergi. But when comparing it to its historical volatility, Indointernet Tbk PT is 1.39 times less risky than Solusi Sinergi. It trades about 0.13 of its potential returns per unit of risk. Solusi Sinergi Digital is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  42,200  in Solusi Sinergi Digital on December 1, 2024 and sell it today you would earn a total of  195,800  from holding Solusi Sinergi Digital or generate 463.98% return on investment over 90 days.

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

Indointernet Tbk PT  vs.  Solusi Sinergi Digital

Indointernet Tbk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indointernet Tbk PT are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Indointernet Tbk disclosed solid returns over the last few months and may actually be approaching a breakup point.

Solusi Sinergi Digital

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Solusi Sinergi Digital are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Solusi Sinergi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indointernet Tbk and Solusi Sinergi

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

The idea behind Indointernet Tbk PT and Solusi Sinergi Digital 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.