Correlation Between Sumber Energi and Putra Mandiri

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

By analyzing existing cross correlation between Sumber Energi Andalan and Putra Mandiri Jembar, you can compare the effects of market volatilities on Sumber Energi and Putra Mandiri 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 Sumber Energi with a short position of Putra Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Energi and Putra Mandiri.

Diversification Opportunities for Sumber Energi and Putra Mandiri

0.25

Correlation Coefficient

Sumber Energi  Putra Mandiri

Modest diversification

The 3 months correlation between Sumber and Putra is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Energi Andalan and Putra Mandiri Jembar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putra Mandiri Jembar and Sumber Energi 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 Sumber Energi Andalan are associated (or correlated) with Putra Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putra Mandiri Jembar has no effect on the direction of Sumber Energi i.e., Sumber Energi and Putra Mandiri go up and down completely randomly.

Pair Corralation between Sumber Energi and Putra Mandiri

Assuming the 90 days trading horizon Sumber Energi Andalan is expected to generate 2.11 times more return on investment than Putra Mandiri. However, Sumber Energi is 2.11 times more volatile than Putra Mandiri Jembar. It trades about 0.08 of its potential returns per unit of risk. Putra Mandiri Jembar is currently generating about -0.02 per unit of risk. If you would invest  72,000  in Sumber Energi Andalan on December 30, 2024 and sell it today you would earn a total of  13,500  from holding Sumber Energi Andalan or generate 18.75% return on investment over 90 days.

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

Sumber Energi Andalan  vs.  Putra Mandiri Jembar

Sumber Energi Andalan

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sumber Energi Andalan are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sumber Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Putra Mandiri Jembar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putra Mandiri Jembar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Putra Mandiri 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 Sumber Energi and Putra Mandiri

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

The idea behind Sumber Energi Andalan and Putra Mandiri Jembar 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.