Correlation Between Humpuss Intermoda and Sona Topas

Can any of the company-specific risk be diversified away by investing in both Humpuss Intermoda and Sona Topas 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 Humpuss Intermoda and Sona Topas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Humpuss Intermoda Transportasi and Sona Topas Tourism, you can compare the effects of market volatilities on Humpuss Intermoda and Sona Topas 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 Humpuss Intermoda with a short position of Sona Topas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humpuss Intermoda and Sona Topas.

Diversification Opportunities for Humpuss Intermoda and Sona Topas

0.6

Correlation Coefficient

Humpuss Intermoda  Sona Topas

Poor diversification

The 3 months correlation between Humpuss and Sona is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Humpuss Intermoda Transportasi and Sona Topas Tourism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sona Topas Tourism and Humpuss Intermoda 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 Humpuss Intermoda Transportasi are associated (or correlated) with Sona Topas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sona Topas Tourism has no effect on the direction of Humpuss Intermoda i.e., Humpuss Intermoda and Sona Topas go up and down completely randomly.

Pair Corralation between Humpuss Intermoda and Sona Topas

Assuming the 90 days trading horizon Humpuss Intermoda Transportasi is expected to generate 0.36 times more return on investment than Sona Topas. However, Humpuss Intermoda Transportasi is 2.75 times less risky than Sona Topas. It trades about -0.05 of its potential returns per unit of risk. Sona Topas Tourism is currently generating about -0.04 per unit of risk. If you would invest  42,800  in Humpuss Intermoda Transportasi on December 2, 2024 and sell it today you would lose (6,400) from holding Humpuss Intermoda Transportasi or give up 14.95% of portfolio value over 90 days.

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

Humpuss Intermoda Transportasi  vs.  Sona Topas Tourism

Humpuss Intermoda

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humpuss Intermoda Transportasi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Sona Topas Tourism

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sona Topas Tourism 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Humpuss Intermoda and Sona Topas

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

The idea behind Humpuss Intermoda Transportasi and Sona Topas Tourism 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.