Correlation Between Surya Citra and Wilton Makmur

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

Diversification Opportunities for Surya Citra and Wilton Makmur

-0.33

Correlation Coefficient

Surya Citra  Wilton Makmur

Very good diversification

The 3 months correlation between Surya and Wilton is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Surya Citra Media and Wilton Makmur Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilton Makmur Indonesia 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 Wilton Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilton Makmur Indonesia has no effect on the direction of Surya Citra i.e., Surya Citra and Wilton Makmur go up and down completely randomly.

Pair Corralation between Surya Citra and Wilton Makmur

Assuming the 90 days trading horizon Surya Citra Media is expected to generate 0.5 times more return on investment than Wilton Makmur. However, Surya Citra Media is 2.0 times less risky than Wilton Makmur. It trades about 0.08 of its potential returns per unit of risk. Wilton Makmur Indonesia is currently generating about 0.03 per unit of risk. If you would invest  11,812  in Surya Citra Media on September 3, 2024 and sell it today you would earn a total of  1,188  from holding Surya Citra Media or generate 10.06% return on investment over 90 days.

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

Surya Citra Media  vs.  Wilton Makmur Indonesia

Surya Citra Media

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Surya Citra Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Surya Citra may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Wilton Makmur Indonesia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wilton Makmur Indonesia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wilton Makmur may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Surya Citra and Wilton Makmur

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

The idea behind Surya Citra Media and Wilton Makmur Indonesia 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.