Correlation Between Siloam International and Modern Internasional

Can any of the company-specific risk be diversified away by investing in both Siloam International and Modern Internasional 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 Siloam International and Modern Internasional into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Siloam International Hospitals and Modern Internasional Tbk, you can compare the effects of market volatilities on Siloam International and Modern Internasional 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 Siloam International with a short position of Modern Internasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siloam International and Modern Internasional.

Diversification Opportunities for Siloam International and Modern Internasional

0.07

Correlation Coefficient

Siloam International  Modern Internasional

Significant diversification

The 3 months correlation between Siloam and Modern is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Siloam International Hospitals and Modern Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modern Internasional Tbk and Siloam International 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 Siloam International Hospitals are associated (or correlated) with Modern Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modern Internasional Tbk has no effect on the direction of Siloam International i.e., Siloam International and Modern Internasional go up and down completely randomly.

Pair Corralation between Siloam International and Modern Internasional

Assuming the 90 days trading horizon Siloam International Hospitals is expected to generate 0.22 times more return on investment than Modern Internasional. However, Siloam International Hospitals is 4.5 times less risky than Modern Internasional. It trades about 0.2 of its potential returns per unit of risk. Modern Internasional Tbk is currently generating about 0.03 per unit of risk. If you would invest  288,000  in Siloam International Hospitals on September 12, 2024 and sell it today you would earn a total of  19,000  from holding Siloam International Hospitals or generate 6.6% return on investment over 90 days.

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

Siloam International Hospitals  vs.  Modern Internasional Tbk

Siloam International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siloam International Hospitals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Siloam International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Modern Internasional Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Modern Internasional Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Modern Internasional may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Siloam International and Modern Internasional

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

The idea behind Siloam International Hospitals and Modern Internasional 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.