Correlation Between Surya Permata and Citra Putra

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

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

Diversification Opportunities for Surya Permata and Citra Putra

-0.39

Correlation Coefficient

Surya Permata  Citra Putra

Very good diversification

The 3 months correlation between Surya and Citra is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Surya Permata Andalan and Citra Putra Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citra Putra Realty and Surya Permata 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 Surya Permata Andalan are associated (or correlated) with Citra Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citra Putra Realty has no effect on the direction of Surya Permata i.e., Surya Permata and Citra Putra go up and down completely randomly.

Pair Corralation between Surya Permata and Citra Putra

Assuming the 90 days trading horizon Surya Permata is expected to generate 265.38 times less return on investment than Citra Putra. But when comparing it to its historical volatility, Surya Permata Andalan is 2.43 times less risky than Citra Putra. It trades about 0.01 of its potential returns per unit of risk. Citra Putra Realty is currently generating about 0.98 of returns per unit of risk over similar time horizon. If you would invest  11,100  in Citra Putra Realty on September 4, 2024 and sell it today you would earn a total of  15,500  from holding Citra Putra Realty or generate 139.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Surya Permata Andalan  vs.  Citra Putra Realty

Surya Permata Andalan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surya Permata Andalan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Surya Permata is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Citra Putra Realty

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citra Putra Realty are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Citra Putra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surya Permata and Citra Putra

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

The idea behind Surya Permata Andalan and Citra Putra Realty 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.