Correlation Between Supreme Cable and Voksel Electric

Can any of the company-specific risk be diversified away by investing in both Supreme Cable and Voksel Electric 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 Supreme Cable and Voksel Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Supreme Cable Manufacturing and Voksel Electric Tbk, you can compare the effects of market volatilities on Supreme Cable and Voksel Electric 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 Supreme Cable with a short position of Voksel Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supreme Cable and Voksel Electric.

Diversification Opportunities for Supreme Cable and Voksel Electric

0.5

Correlation Coefficient

Supreme Cable  Voksel Electric

Very weak diversification

The 3 months correlation between Supreme and Voksel is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Supreme Cable Manufacturing and Voksel Electric Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voksel Electric Tbk and Supreme Cable 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 Supreme Cable Manufacturing are associated (or correlated) with Voksel Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voksel Electric Tbk has no effect on the direction of Supreme Cable i.e., Supreme Cable and Voksel Electric go up and down completely randomly.

Pair Corralation between Supreme Cable and Voksel Electric

Assuming the 90 days trading horizon Supreme Cable Manufacturing is expected to generate 0.47 times more return on investment than Voksel Electric. However, Supreme Cable Manufacturing is 2.13 times less risky than Voksel Electric. It trades about -0.04 of its potential returns per unit of risk. Voksel Electric Tbk is currently generating about -0.03 per unit of risk. If you would invest  217,000  in Supreme Cable Manufacturing on December 30, 2024 and sell it today you would lose (12,000) from holding Supreme Cable Manufacturing or give up 5.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Supreme Cable Manufacturing  vs.  Voksel Electric Tbk

Supreme Cable Manufa

Risk-Adjusted Performance

Very Weak

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

Voksel Electric Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Voksel Electric Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Supreme Cable and Voksel Electric

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

The idea behind Supreme Cable Manufacturing and Voksel Electric 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.