Correlation Between PT Indonesia and PT Sarimelati

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

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

Diversification Opportunities for PT Indonesia and PT Sarimelati

-0.91

Correlation Coefficient

PT Indonesia  PT Sarimelati

Pay attention - limited upside

The 3 months correlation between IPCC and PZZA is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding PT Indonesia Kendaraan and PT Sarimelati Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sarimelati Kencana and PT Indonesia 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 PT Indonesia Kendaraan are associated (or correlated) with PT Sarimelati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sarimelati Kencana has no effect on the direction of PT Indonesia i.e., PT Indonesia and PT Sarimelati go up and down completely randomly.

Pair Corralation between PT Indonesia and PT Sarimelati

Assuming the 90 days trading horizon PT Indonesia Kendaraan is expected to generate 0.55 times more return on investment than PT Sarimelati. However, PT Indonesia Kendaraan is 1.8 times less risky than PT Sarimelati. It trades about 0.11 of its potential returns per unit of risk. PT Sarimelati Kencana is currently generating about -0.33 per unit of risk. If you would invest  65,226  in PT Indonesia Kendaraan on September 14, 2024 and sell it today you would earn a total of  5,774  from holding PT Indonesia Kendaraan or generate 8.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

PT Indonesia Kendaraan  vs.  PT Sarimelati Kencana

PT Indonesia Kendaraan

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indonesia Kendaraan are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Indonesia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Sarimelati Kencana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Sarimelati Kencana 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.

Pair Trading with PT Indonesia and PT Sarimelati

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

The idea behind PT Indonesia Kendaraan and PT Sarimelati Kencana 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.