Correlation Between Prasidha Aneka and Sekar Laut

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

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

Diversification Opportunities for Prasidha Aneka and Sekar Laut

0.03

Correlation Coefficient

Prasidha Aneka  Sekar Laut

Significant diversification

The 3 months correlation between Prasidha and Sekar is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Prasidha Aneka Niaga and Sekar Laut Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekar Laut Tbk and Prasidha Aneka 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 Prasidha Aneka Niaga are associated (or correlated) with Sekar Laut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekar Laut Tbk has no effect on the direction of Prasidha Aneka i.e., Prasidha Aneka and Sekar Laut go up and down completely randomly.

Pair Corralation between Prasidha Aneka and Sekar Laut

Assuming the 90 days trading horizon Prasidha Aneka Niaga is expected to under-perform the Sekar Laut. But the stock apears to be less risky and, when comparing its historical volatility, Prasidha Aneka Niaga is 4.81 times less risky than Sekar Laut. The stock trades about -0.03 of its potential returns per unit of risk. The Sekar Laut Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  18,800  in Sekar Laut Tbk on September 1, 2024 and sell it today you would earn a total of  700.00  from holding Sekar Laut Tbk or generate 3.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Prasidha Aneka Niaga  vs.  Sekar Laut Tbk

Prasidha Aneka Niaga

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sekar Laut Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sekar Laut Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sekar Laut disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prasidha Aneka and Sekar Laut

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

The idea behind Prasidha Aneka Niaga and Sekar Laut 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.