Correlation Between Indosat Tbk and Semen Indonesia

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

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

Diversification Opportunities for Indosat Tbk and Semen Indonesia

0.09

Correlation Coefficient

Indosat Tbk  Semen Indonesia

Significant diversification

The 3 months correlation between Indosat and Semen is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Semen Indonesia Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semen Indonesia Persero and Indosat 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 Indosat Tbk are associated (or correlated) with Semen Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semen Indonesia Persero has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Semen Indonesia go up and down completely randomly.

Pair Corralation between Indosat Tbk and Semen Indonesia

Assuming the 90 days trading horizon Indosat Tbk is expected to under-perform the Semen Indonesia. In addition to that, Indosat Tbk is 4.47 times more volatile than Semen Indonesia Persero. It trades about -0.13 of its total potential returns per unit of risk. Semen Indonesia Persero is currently generating about -0.09 per unit of volatility. If you would invest  403,000  in Semen Indonesia Persero on September 3, 2024 and sell it today you would lose (53,000) from holding Semen Indonesia Persero or give up 13.15% of portfolio value over 90 days.

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

Indosat Tbk  vs.  Semen Indonesia Persero

Indosat Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indosat Tbk 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.

Semen Indonesia Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Semen Indonesia Persero 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.

Pair Trading with Indosat Tbk and Semen Indonesia

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

The idea behind Indosat Tbk and Semen Indonesia Persero 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.