Correlation Between PT Semen and Spectra7 Microsystems

Can any of the company-specific risk be diversified away by investing in both PT Semen and Spectra7 Microsystems 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 Spectra7 Microsystems 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 Spectra7 Microsystems, you can compare the effects of market volatilities on PT Semen and Spectra7 Microsystems 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 Spectra7 Microsystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Semen and Spectra7 Microsystems.

Diversification Opportunities for PT Semen and Spectra7 Microsystems

0.45

Correlation Coefficient

PT Semen  Spectra7 Microsystems

Very weak diversification

The 3 months correlation between PSGTF and Spectra7 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PT Semen Indonesia and Spectra7 Microsystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectra7 Microsystems 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 Spectra7 Microsystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectra7 Microsystems has no effect on the direction of PT Semen i.e., PT Semen and Spectra7 Microsystems go up and down completely randomly.

Pair Corralation between PT Semen and Spectra7 Microsystems

Assuming the 90 days horizon PT Semen Indonesia is expected to generate 0.42 times more return on investment than Spectra7 Microsystems. However, PT Semen Indonesia is 2.41 times less risky than Spectra7 Microsystems. It trades about -0.16 of its potential returns per unit of risk. Spectra7 Microsystems is currently generating about -0.13 per unit of risk. If you would invest  23.00  in PT Semen Indonesia on December 22, 2024 and sell it today you would lose (11.00) from holding PT Semen Indonesia or give up 47.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

PT Semen Indonesia  vs.  Spectra7 Microsystems

PT Semen Indonesia

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Spectra7 Microsystems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spectra7 Microsystems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PT Semen and Spectra7 Microsystems

The main advantage of trading using opposite PT Semen and Spectra7 Microsystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Semen position performs unexpectedly, Spectra7 Microsystems 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 Spectra7 Microsystems will offset losses from the drop in Spectra7 Microsystems' long position.

The idea behind PT Semen Indonesia and Spectra7 Microsystems 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.