Correlation Between Sarana Meditama and Phapros Tbk

Can any of the company-specific risk be diversified away by investing in both Sarana Meditama and Phapros Tbk 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 Sarana Meditama and Phapros Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Sarana Meditama and Phapros Tbk

0.67

Correlation Coefficient

Sarana Meditama  Phapros Tbk

Poor diversification

The 3 months correlation between Sarana and Phapros is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sarana Meditama Metropolitan and Phapros Tbk PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phapros Tbk PT and Sarana Meditama 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 Sarana Meditama Metropolitan are associated (or correlated) with Phapros Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phapros Tbk PT has no effect on the direction of Sarana Meditama i.e., Sarana Meditama and Phapros Tbk go up and down completely randomly.

Pair Corralation between Sarana Meditama and Phapros Tbk

Assuming the 90 days trading horizon Sarana Meditama Metropolitan is expected to generate 0.71 times more return on investment than Phapros Tbk. However, Sarana Meditama Metropolitan is 1.41 times less risky than Phapros Tbk. It trades about -0.32 of its potential returns per unit of risk. Phapros Tbk PT is currently generating about -0.34 per unit of risk. If you would invest  29,200  in Sarana Meditama Metropolitan on September 1, 2024 and sell it today you would lose (4,200) from holding Sarana Meditama Metropolitan or give up 14.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Sarana Meditama Metropolitan  vs.  Phapros Tbk PT

Sarana Meditama Metr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sarana Meditama Metropolitan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Phapros Tbk PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phapros Tbk PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Sarana Meditama and Phapros Tbk

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

The idea behind Sarana Meditama Metropolitan and Phapros Tbk PT 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.