Correlation Between Sanurhasta Mitra and Smartfren Telecom

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

By analyzing existing cross correlation between Sanurhasta Mitra PT and Smartfren Telecom Tbk, you can compare the effects of market volatilities on Sanurhasta Mitra and Smartfren Telecom 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 Sanurhasta Mitra with a short position of Smartfren Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanurhasta Mitra and Smartfren Telecom.

Diversification Opportunities for Sanurhasta Mitra and Smartfren Telecom

-0.74

Correlation Coefficient

Sanurhasta Mitra  Smartfren Telecom

Pay attention - limited upside

The 3 months correlation between Sanurhasta and Smartfren is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sanurhasta Mitra PT and Smartfren Telecom Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartfren Telecom Tbk and Sanurhasta 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 Sanurhasta Mitra PT are associated (or correlated) with Smartfren Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartfren Telecom Tbk has no effect on the direction of Sanurhasta Mitra i.e., Sanurhasta Mitra and Smartfren Telecom go up and down completely randomly.

Pair Corralation between Sanurhasta Mitra and Smartfren Telecom

Assuming the 90 days trading horizon Sanurhasta Mitra PT is expected to generate 1.96 times more return on investment than Smartfren Telecom. However, Sanurhasta Mitra is 1.96 times more volatile than Smartfren Telecom Tbk. It trades about 0.32 of its potential returns per unit of risk. Smartfren Telecom Tbk is currently generating about -0.06 per unit of risk. If you would invest  2,000  in Sanurhasta Mitra PT on October 10, 2024 and sell it today you would earn a total of  3,400  from holding Sanurhasta Mitra PT or generate 170.0% return on investment over 90 days.

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

Sanurhasta Mitra PT  vs.  Smartfren Telecom Tbk

Sanurhasta Mitra

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sanurhasta Mitra PT are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sanurhasta Mitra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Smartfren Telecom Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smartfren Telecom 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 Sanurhasta Mitra and Smartfren Telecom

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

The idea behind Sanurhasta Mitra PT and Smartfren Telecom 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.