Correlation Between PT Indonesia and Satria Antaran

Can any of the company-specific risk be diversified away by investing in both PT Indonesia and Satria Antaran 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 Satria Antaran 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 Satria Antaran Prima, you can compare the effects of market volatilities on PT Indonesia and Satria Antaran 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 Satria Antaran. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indonesia and Satria Antaran.

Diversification Opportunities for PT Indonesia and Satria Antaran

-0.37

Correlation Coefficient

PT Indonesia  Satria Antaran

Very good diversification

The 3 months correlation between IPCC and Satria is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding PT Indonesia Kendaraan and Satria Antaran Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satria Antaran Prima 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 Satria Antaran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satria Antaran Prima has no effect on the direction of PT Indonesia i.e., PT Indonesia and Satria Antaran go up and down completely randomly.

Pair Corralation between PT Indonesia and Satria Antaran

Assuming the 90 days trading horizon PT Indonesia Kendaraan is expected to generate 0.25 times more return on investment than Satria Antaran. However, PT Indonesia Kendaraan is 4.01 times less risky than Satria Antaran. It trades about 0.11 of its potential returns per unit of risk. Satria Antaran Prima is currently generating about -0.12 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	Insignificant
Accuracy	98.41%
Values	Daily Returns

PT Indonesia Kendaraan  vs.  Satria Antaran Prima

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.

Satria Antaran Prima

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Satria Antaran Prima 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 Satria Antaran

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

The idea behind PT Indonesia Kendaraan and Satria Antaran Prima 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.