Correlation Between Sido Muncul and Puradelta Lestari

Can any of the company-specific risk be diversified away by investing in both Sido Muncul and Puradelta Lestari 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 Sido Muncul and Puradelta Lestari into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sido Muncul PT and Puradelta Lestari PT, you can compare the effects of market volatilities on Sido Muncul and Puradelta Lestari 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 Sido Muncul with a short position of Puradelta Lestari. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sido Muncul and Puradelta Lestari.

Diversification Opportunities for Sido Muncul and Puradelta Lestari

0.55

Correlation Coefficient

Sido Muncul  Puradelta Lestari

Very weak diversification

The 3 months correlation between Sido and Puradelta is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sido Muncul PT and Puradelta Lestari PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puradelta Lestari and Sido Muncul 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 Sido Muncul PT are associated (or correlated) with Puradelta Lestari. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puradelta Lestari has no effect on the direction of Sido Muncul i.e., Sido Muncul and Puradelta Lestari go up and down completely randomly.

Pair Corralation between Sido Muncul and Puradelta Lestari

Assuming the 90 days trading horizon Sido Muncul PT is expected to under-perform the Puradelta Lestari. In addition to that, Sido Muncul is 2.17 times more volatile than Puradelta Lestari PT. It trades about -0.1 of its total potential returns per unit of risk. Puradelta Lestari PT is currently generating about -0.1 per unit of volatility. If you would invest  16,300  in Puradelta Lestari PT on September 15, 2024 and sell it today you would lose (800.00) from holding Puradelta Lestari PT or give up 4.91% of portfolio value over 90 days.

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

Sido Muncul PT  vs.  Puradelta Lestari PT

Sido Muncul PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sido Muncul PT 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.

Puradelta Lestari

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Puradelta Lestari PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Puradelta Lestari 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 Sido Muncul and Puradelta Lestari

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

The idea behind Sido Muncul PT and Puradelta Lestari 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.