Correlation Between Indospring Tbk and PT Surya

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

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

Diversification Opportunities for Indospring Tbk and PT Surya

0.55

Correlation Coefficient

Indospring Tbk  PT Surya

Very weak diversification

The 3 months correlation between Indospring and SPTO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Indospring Tbk and PT Surya Pertiwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Surya Pertiwi and Indospring 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 Indospring Tbk are associated (or correlated) with PT Surya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Surya Pertiwi has no effect on the direction of Indospring Tbk i.e., Indospring Tbk and PT Surya go up and down completely randomly.

Pair Corralation between Indospring Tbk and PT Surya

Assuming the 90 days trading horizon Indospring Tbk is expected to under-perform the PT Surya. In addition to that, Indospring Tbk is 1.75 times more volatile than PT Surya Pertiwi. It trades about -0.07 of its total potential returns per unit of risk. PT Surya Pertiwi is currently generating about -0.07 per unit of volatility. If you would invest  64,000  in PT Surya Pertiwi on December 23, 2024 and sell it today you would lose (4,000) from holding PT Surya Pertiwi or give up 6.25% of portfolio value over 90 days.

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

Indospring Tbk  vs.  PT Surya Pertiwi

Indospring Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indospring Tbk 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.

PT Surya Pertiwi

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Surya Pertiwi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Surya 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 Indospring Tbk and PT Surya

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

The idea behind Indospring Tbk and PT Surya Pertiwi 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.