Correlation Between Prima Cakrawala and Sekar Bumi

Can any of the company-specific risk be diversified away by investing in both Prima Cakrawala and Sekar Bumi 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 Prima Cakrawala and Sekar Bumi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prima Cakrawala Abadi and Sekar Bumi Tbk, you can compare the effects of market volatilities on Prima Cakrawala and Sekar Bumi 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 Prima Cakrawala with a short position of Sekar Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prima Cakrawala and Sekar Bumi.

Diversification Opportunities for Prima Cakrawala and Sekar Bumi

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Correlation Coefficient

Prima Cakrawala  Sekar Bumi

Pay attention - limited upside

The 3 months correlation between Prima and Sekar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prima Cakrawala Abadi and Sekar Bumi Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekar Bumi Tbk and Prima Cakrawala 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 Prima Cakrawala Abadi are associated (or correlated) with Sekar Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekar Bumi Tbk has no effect on the direction of Prima Cakrawala i.e., Prima Cakrawala and Sekar Bumi go up and down completely randomly.

Pair Corralation between Prima Cakrawala and Sekar Bumi

If you would invest  38,000  in Sekar Bumi Tbk on October 12, 2024 and sell it today you would earn a total of  5,200  from holding Sekar Bumi Tbk or generate 13.68% return on investment over 90 days.

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

Prima Cakrawala Abadi  vs.  Sekar Bumi Tbk

Prima Cakrawala Abadi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sekar Bumi Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sekar Bumi Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sekar Bumi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prima Cakrawala and Sekar Bumi

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

The idea behind Prima Cakrawala Abadi and Sekar Bumi 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.