Correlation Between Mark Dynamics and Selamat Sempurna

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

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

Diversification Opportunities for Mark Dynamics and Selamat Sempurna

0.07

Correlation Coefficient

Mark Dynamics  Selamat Sempurna

Significant diversification

The 3 months correlation between Mark and Selamat is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mark Dynamics Indonesia and Selamat Sempurna Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selamat Sempurna Tbk and Mark Dynamics 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 Mark Dynamics Indonesia are associated (or correlated) with Selamat Sempurna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selamat Sempurna Tbk has no effect on the direction of Mark Dynamics i.e., Mark Dynamics and Selamat Sempurna go up and down completely randomly.

Pair Corralation between Mark Dynamics and Selamat Sempurna

Assuming the 90 days trading horizon Mark Dynamics Indonesia is expected to generate 1.18 times more return on investment than Selamat Sempurna. However, Mark Dynamics is 1.18 times more volatile than Selamat Sempurna Tbk. It trades about 0.07 of its potential returns per unit of risk. Selamat Sempurna Tbk is currently generating about 0.04 per unit of risk. If you would invest  53,336  in Mark Dynamics Indonesia on October 9, 2024 and sell it today you would earn a total of  53,664  from holding Mark Dynamics Indonesia or generate 100.61% return on investment over 90 days.

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

Mark Dynamics Indonesia  vs.  Selamat Sempurna Tbk

Mark Dynamics Indonesia

Risk-Adjusted Performance

1 of 100

Weak

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

Selamat Sempurna Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Selamat Sempurna Tbk 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 Mark Dynamics and Selamat Sempurna

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

The idea behind Mark Dynamics Indonesia and Selamat Sempurna Tbk 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 Global Correlations module to find global opportunities by holding instruments from different markets.