Correlation Between Surya Citra and Merdeka Copper

Can any of the company-specific risk be diversified away by investing in both Surya Citra and Merdeka Copper 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 Surya Citra and Merdeka Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Surya Citra Media and Merdeka Copper Gold, you can compare the effects of market volatilities on Surya Citra and Merdeka Copper 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 Surya Citra with a short position of Merdeka Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surya Citra and Merdeka Copper.

Diversification Opportunities for Surya Citra and Merdeka Copper

0.18

Correlation Coefficient

Surya Citra  Merdeka Copper

Average diversification

The 3 months correlation between Surya and Merdeka is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Surya Citra Media and Merdeka Copper Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merdeka Copper Gold and Surya Citra 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 Surya Citra Media are associated (or correlated) with Merdeka Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merdeka Copper Gold has no effect on the direction of Surya Citra i.e., Surya Citra and Merdeka Copper go up and down completely randomly.

Pair Corralation between Surya Citra and Merdeka Copper

Assuming the 90 days trading horizon Surya Citra Media is expected to generate 0.73 times more return on investment than Merdeka Copper. However, Surya Citra Media is 1.37 times less risky than Merdeka Copper. It trades about 0.11 of its potential returns per unit of risk. Merdeka Copper Gold is currently generating about -0.02 per unit of risk. If you would invest  16,700  in Surya Citra Media on December 30, 2024 and sell it today you would earn a total of  3,300  from holding Surya Citra Media or generate 19.76% return on investment over 90 days.

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

Surya Citra Media  vs.  Merdeka Copper Gold

Surya Citra Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surya Citra Media are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Surya Citra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Merdeka Copper Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merdeka Copper Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Merdeka Copper 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 Surya Citra and Merdeka Copper

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

The idea behind Surya Citra Media and Merdeka Copper Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.