Correlation Between Prodia Widyahusada and PT Sarimelati

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

By analyzing existing cross correlation between Prodia Widyahusada Tbk and PT Sarimelati Kencana, you can compare the effects of market volatilities on Prodia Widyahusada and PT Sarimelati 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 Prodia Widyahusada with a short position of PT Sarimelati. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prodia Widyahusada and PT Sarimelati.

Diversification Opportunities for Prodia Widyahusada and PT Sarimelati

-0.26

Correlation Coefficient

Prodia Widyahusada  PT Sarimelati

Very good diversification

The 3 months correlation between Prodia and PZZA is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Prodia Widyahusada Tbk and PT Sarimelati Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sarimelati Kencana and Prodia Widyahusada 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 Prodia Widyahusada Tbk are associated (or correlated) with PT Sarimelati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sarimelati Kencana has no effect on the direction of Prodia Widyahusada i.e., Prodia Widyahusada and PT Sarimelati go up and down completely randomly.

Pair Corralation between Prodia Widyahusada and PT Sarimelati

Assuming the 90 days trading horizon Prodia Widyahusada Tbk is expected to under-perform the PT Sarimelati. But the stock apears to be less risky and, when comparing its historical volatility, Prodia Widyahusada Tbk is 4.85 times less risky than PT Sarimelati. The stock trades about -0.02 of its potential returns per unit of risk. The PT Sarimelati Kencana is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  11,400  in PT Sarimelati Kencana on December 27, 2024 and sell it today you would lose (400.00) from holding PT Sarimelati Kencana or give up 3.51% of portfolio value over 90 days.

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

Prodia Widyahusada Tbk  vs.  PT Sarimelati Kencana

Prodia Widyahusada Tbk

Risk-Adjusted Performance

Very Weak

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

PT Sarimelati Kencana

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Sarimelati Kencana are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Sarimelati may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Prodia Widyahusada and PT Sarimelati

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

The idea behind Prodia Widyahusada Tbk and PT Sarimelati Kencana 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 Stocks Directory module to find actively traded stocks across global markets.