Correlation Between Surya Esa and Adi Sarana

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

By analyzing existing cross correlation between Surya Esa Perkasa and Adi Sarana Armada, you can compare the effects of market volatilities on Surya Esa and Adi Sarana 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 Surya Esa with a short position of Adi Sarana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surya Esa and Adi Sarana.

Diversification Opportunities for Surya Esa and Adi Sarana

0.62

Correlation Coefficient

Surya Esa  Adi Sarana

Poor diversification

The 3 months correlation between Surya and Adi is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Surya Esa Perkasa and Adi Sarana Armada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adi Sarana Armada and Surya Esa 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 Surya Esa Perkasa are associated (or correlated) with Adi Sarana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adi Sarana Armada has no effect on the direction of Surya Esa i.e., Surya Esa and Adi Sarana go up and down completely randomly.

Pair Corralation between Surya Esa and Adi Sarana

Assuming the 90 days trading horizon Surya Esa Perkasa is expected to under-perform the Adi Sarana. In addition to that, Surya Esa is 1.6 times more volatile than Adi Sarana Armada. It trades about -0.03 of its total potential returns per unit of risk. Adi Sarana Armada is currently generating about 0.01 per unit of volatility. If you would invest  72,486  in Adi Sarana Armada on September 2, 2024 and sell it today you would earn a total of  14.00  from holding Adi Sarana Armada or generate 0.02% return on investment over 90 days.

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

Surya Esa Perkasa  vs.  Adi Sarana Armada

Surya Esa Perkasa

Risk-Adjusted Performance

0 of 100

Very Weak

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

Adi Sarana Armada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adi Sarana Armada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Adi Sarana 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 Surya Esa and Adi Sarana

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

The idea behind Surya Esa Perkasa and Adi Sarana Armada 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.