Correlation Between Sejahtera Bintang and Putra Rajawali

Can any of the company-specific risk be diversified away by investing in both Sejahtera Bintang and Putra Rajawali 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 Sejahtera Bintang and Putra Rajawali into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sejahtera Bintang Abadi and Putra Rajawali Kencana, you can compare the effects of market volatilities on Sejahtera Bintang and Putra Rajawali 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 Sejahtera Bintang with a short position of Putra Rajawali. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejahtera Bintang and Putra Rajawali.

Diversification Opportunities for Sejahtera Bintang and Putra Rajawali

0.0

Correlation Coefficient

Sejahtera Bintang  Putra Rajawali

Pay attention - limited upside

The 3 months correlation between Sejahtera and Putra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sejahtera Bintang Abadi and Putra Rajawali Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putra Rajawali Kencana and Sejahtera Bintang 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 Sejahtera Bintang Abadi are associated (or correlated) with Putra Rajawali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putra Rajawali Kencana has no effect on the direction of Sejahtera Bintang i.e., Sejahtera Bintang and Putra Rajawali go up and down completely randomly.

Pair Corralation between Sejahtera Bintang and Putra Rajawali

If you would invest  1,200  in Putra Rajawali Kencana on October 25, 2024 and sell it today you would earn a total of  200.00  from holding Putra Rajawali Kencana or generate 16.67% return on investment over 90 days.

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

Sejahtera Bintang Abadi  vs.  Putra Rajawali Kencana

Sejahtera Bintang Abadi

Risk-Adjusted Performance

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Very Weak

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

Putra Rajawali Kencana

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sejahtera Bintang and Putra Rajawali

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

The idea behind Sejahtera Bintang Abadi and Putra Rajawali 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.