Correlation Between Sentral Mitra and Tourindo Guide

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

By analyzing existing cross correlation between Sentral Mitra Informatika and Tourindo Guide Indonesia, you can compare the effects of market volatilities on Sentral Mitra and Tourindo Guide 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 Sentral Mitra with a short position of Tourindo Guide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentral Mitra and Tourindo Guide.

Diversification Opportunities for Sentral Mitra and Tourindo Guide

-0.44

Correlation Coefficient

Sentral Mitra  Tourindo Guide

Very good diversification

The 3 months correlation between Sentral and Tourindo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sentral Mitra Informatika and Tourindo Guide Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourindo Guide Indonesia and Sentral Mitra 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 Sentral Mitra Informatika are associated (or correlated) with Tourindo Guide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourindo Guide Indonesia has no effect on the direction of Sentral Mitra i.e., Sentral Mitra and Tourindo Guide go up and down completely randomly.

Pair Corralation between Sentral Mitra and Tourindo Guide

Assuming the 90 days trading horizon Sentral Mitra Informatika is expected to under-perform the Tourindo Guide. In addition to that, Sentral Mitra is 1.41 times more volatile than Tourindo Guide Indonesia. It trades about -0.01 of its total potential returns per unit of risk. Tourindo Guide Indonesia is currently generating about 0.03 per unit of volatility. If you would invest  7,700  in Tourindo Guide Indonesia on October 10, 2024 and sell it today you would earn a total of  1,600  from holding Tourindo Guide Indonesia or generate 20.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Sentral Mitra Informatika  vs.  Tourindo Guide Indonesia

Sentral Mitra Informatika

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sentral Mitra Informatika are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Sentral Mitra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Tourindo Guide Indonesia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tourindo Guide Indonesia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Tourindo Guide 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 Sentral Mitra and Tourindo Guide

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

The idea behind Sentral Mitra Informatika and Tourindo Guide Indonesia 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.