Correlation Between PT Semen and CPG Old

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

By analyzing existing cross correlation between PT Semen Indonesia and CPG Old, you can compare the effects of market volatilities on PT Semen and CPG Old 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 PT Semen with a short position of CPG Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Semen and CPG Old.

Diversification Opportunities for PT Semen and CPG Old

0.84

Correlation Coefficient

PT Semen  CPG Old

Very poor diversification

The 3 months correlation between PSGTF and CPG is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PT Semen Indonesia and CPG Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPG Old and PT Semen 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 PT Semen Indonesia are associated (or correlated) with CPG Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPG Old has no effect on the direction of PT Semen i.e., PT Semen and CPG Old go up and down completely randomly.

Pair Corralation between PT Semen and CPG Old

If you would invest  799.00  in CPG Old on October 10, 2024 and sell it today you would earn a total of  0.00  from holding CPG Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

PT Semen Indonesia  vs.  CPG Old

PT Semen Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Semen Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CPG Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPG Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CPG Old is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Semen and CPG Old

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

The idea behind PT Semen Indonesia and CPG Old 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.