Correlation Between Martin Marietta and PT Semen

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

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

Diversification Opportunities for Martin Marietta and PT Semen

0.43

Correlation Coefficient

Martin Marietta  PT Semen

Very weak diversification

The 3 months correlation between Martin and PSGTF is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and PT Semen Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Semen Indonesia and Martin Marietta 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 Martin Marietta Materials are associated (or correlated) with PT Semen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Semen Indonesia has no effect on the direction of Martin Marietta i.e., Martin Marietta and PT Semen go up and down completely randomly.

Pair Corralation between Martin Marietta and PT Semen

Considering the 90-day investment horizon Martin Marietta Materials is expected to under-perform the PT Semen. But the stock apears to be less risky and, when comparing its historical volatility, Martin Marietta Materials is 1.29 times less risky than PT Semen. The stock trades about -0.27 of its potential returns per unit of risk. The PT Semen Indonesia is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  23.00  in PT Semen Indonesia on December 4, 2024 and sell it today you would lose (3.00) from holding PT Semen Indonesia or give up 13.04% of portfolio value over 90 days.

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

Martin Marietta Materials  vs.  PT Semen Indonesia

Martin Marietta Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Martin Marietta Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

PT Semen Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Semen Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Martin Marietta and PT Semen

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

The idea behind Martin Marietta Materials and PT Semen 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.