Correlation Between Cikarang Listrindo and Saratoga Investama

Can any of the company-specific risk be diversified away by investing in both Cikarang Listrindo and Saratoga Investama 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 Cikarang Listrindo and Saratoga Investama into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cikarang Listrindo Tbk and Saratoga Investama Sedaya, you can compare the effects of market volatilities on Cikarang Listrindo and Saratoga Investama 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 Cikarang Listrindo with a short position of Saratoga Investama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cikarang Listrindo and Saratoga Investama.

Diversification Opportunities for Cikarang Listrindo and Saratoga Investama

0.1

Correlation Coefficient

Cikarang Listrindo  Saratoga Investama

Average diversification

The 3 months correlation between Cikarang and Saratoga is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cikarang Listrindo Tbk and Saratoga Investama Sedaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saratoga Investama Sedaya and Cikarang Listrindo 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 Cikarang Listrindo Tbk are associated (or correlated) with Saratoga Investama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saratoga Investama Sedaya has no effect on the direction of Cikarang Listrindo i.e., Cikarang Listrindo and Saratoga Investama go up and down completely randomly.

Pair Corralation between Cikarang Listrindo and Saratoga Investama

Assuming the 90 days trading horizon Cikarang Listrindo Tbk is expected to generate 0.21 times more return on investment than Saratoga Investama. However, Cikarang Listrindo Tbk is 4.81 times less risky than Saratoga Investama. It trades about 0.09 of its potential returns per unit of risk. Saratoga Investama Sedaya is currently generating about -0.03 per unit of risk. If you would invest  67,500  in Cikarang Listrindo Tbk on September 2, 2024 and sell it today you would earn a total of  3,500  from holding Cikarang Listrindo Tbk or generate 5.19% return on investment over 90 days.

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

Cikarang Listrindo Tbk  vs.  Saratoga Investama Sedaya

Cikarang Listrindo Tbk

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cikarang Listrindo Tbk are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Cikarang Listrindo is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Saratoga Investama Sedaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saratoga Investama Sedaya 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 Cikarang Listrindo and Saratoga Investama

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

The idea behind Cikarang Listrindo Tbk and Saratoga Investama Sedaya 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.