Correlation Between PT Sreeya and PT Mulia

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

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

Diversification Opportunities for PT Sreeya and PT Mulia

0.63

Correlation Coefficient

PT Sreeya  PT Mulia

Poor diversification

The 3 months correlation between SIPD and MLIA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PT Sreeya Sewu and PT Mulia Industrindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Mulia Industrindo and PT Sreeya 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 PT Sreeya Sewu are associated (or correlated) with PT Mulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Mulia Industrindo has no effect on the direction of PT Sreeya i.e., PT Sreeya and PT Mulia go up and down completely randomly.

Pair Corralation between PT Sreeya and PT Mulia

Assuming the 90 days trading horizon PT Sreeya Sewu is expected to under-perform the PT Mulia. In addition to that, PT Sreeya is 3.52 times more volatile than PT Mulia Industrindo. It trades about -0.08 of its total potential returns per unit of risk. PT Mulia Industrindo is currently generating about 0.0 per unit of volatility. If you would invest  32,400  in PT Mulia Industrindo on September 11, 2024 and sell it today you would earn a total of  0.00  from holding PT Mulia Industrindo or generate 0.0% return on investment over 90 days.

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

PT Sreeya Sewu  vs.  PT Mulia Industrindo

PT Sreeya Sewu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Sreeya Sewu 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.

PT Mulia Industrindo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Mulia Industrindo 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.

Pair Trading with PT Sreeya and PT Mulia

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

The idea behind PT Sreeya Sewu and PT Mulia Industrindo 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.