Correlation Between Semacom Integrated and RMK Energy

Can any of the company-specific risk be diversified away by investing in both Semacom Integrated and RMK Energy 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 Semacom Integrated and RMK Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Semacom Integrated and RMK Energy

-0.04

Correlation Coefficient

Semacom Integrated  RMK Energy

Good diversification

The 3 months correlation between Semacom and RMK is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Semacom Integrated Tbk and RMK Energy PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMK Energy PT and Semacom Integrated 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 Semacom Integrated Tbk are associated (or correlated) with RMK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMK Energy PT has no effect on the direction of Semacom Integrated i.e., Semacom Integrated and RMK Energy go up and down completely randomly.

Pair Corralation between Semacom Integrated and RMK Energy

Assuming the 90 days trading horizon Semacom Integrated Tbk is expected to generate 3.93 times more return on investment than RMK Energy. However, Semacom Integrated is 3.93 times more volatile than RMK Energy PT. It trades about 0.02 of its potential returns per unit of risk. RMK Energy PT is currently generating about 0.07 per unit of risk. If you would invest  8,500  in Semacom Integrated Tbk on December 21, 2024 and sell it today you would lose (200.00) from holding Semacom Integrated Tbk or give up 2.35% of portfolio value over 90 days.

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

Semacom Integrated Tbk  vs.  RMK Energy PT

Semacom Integrated Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Semacom Integrated Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Semacom Integrated is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

RMK Energy PT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RMK Energy PT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, RMK Energy 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 Semacom Integrated and RMK Energy

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

The idea behind Semacom Integrated Tbk and RMK Energy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.