Correlation Between Cikarang Listrindo and Surya Toto

Can any of the company-specific risk be diversified away by investing in both Cikarang Listrindo and Surya Toto 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 Surya Toto 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 Surya Toto Indonesia, you can compare the effects of market volatilities on Cikarang Listrindo and Surya Toto 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 Surya Toto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cikarang Listrindo and Surya Toto.

Diversification Opportunities for Cikarang Listrindo and Surya Toto

0.33

Correlation Coefficient

Cikarang Listrindo  Surya Toto

Weak diversification

The 3 months correlation between Cikarang and Surya is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cikarang Listrindo Tbk and Surya Toto Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Toto Indonesia 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 Surya Toto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Toto Indonesia has no effect on the direction of Cikarang Listrindo i.e., Cikarang Listrindo and Surya Toto go up and down completely randomly.

Pair Corralation between Cikarang Listrindo and Surya Toto

Assuming the 90 days trading horizon Cikarang Listrindo is expected to generate 1.61 times less return on investment than Surya Toto. But when comparing it to its historical volatility, Cikarang Listrindo Tbk is 1.37 times less risky than Surya Toto. It trades about 0.06 of its potential returns per unit of risk. Surya Toto Indonesia is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  21,071  in Surya Toto Indonesia on September 15, 2024 and sell it today you would earn a total of  1,129  from holding Surya Toto Indonesia or generate 5.36% return on investment over 90 days.

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

Cikarang Listrindo Tbk  vs.  Surya Toto Indonesia

Cikarang Listrindo Tbk

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cikarang Listrindo Tbk are ranked lower than 4 (%) 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.

Surya Toto Indonesia

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Surya Toto Indonesia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Surya Toto is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Cikarang Listrindo and Surya Toto

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

The idea behind Cikarang Listrindo Tbk and Surya Toto 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 Commodity Directory module to find actively traded commodities issued by global exchanges.