Correlation Between PT Sreeya and Tunas Baru

Can any of the company-specific risk be diversified away by investing in both PT Sreeya and Tunas Baru 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 Tunas Baru 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 Tunas Baru Lampung, you can compare the effects of market volatilities on PT Sreeya and Tunas Baru 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 Tunas Baru. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Sreeya and Tunas Baru.

Diversification Opportunities for PT Sreeya and Tunas Baru

-0.58

Correlation Coefficient

PT Sreeya  Tunas Baru

Excellent diversification

The 3 months correlation between SIPD and Tunas is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding PT Sreeya Sewu and Tunas Baru Lampung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tunas Baru Lampung 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 Tunas Baru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tunas Baru Lampung has no effect on the direction of PT Sreeya i.e., PT Sreeya and Tunas Baru go up and down completely randomly.

Pair Corralation between PT Sreeya and Tunas Baru

Assuming the 90 days trading horizon PT Sreeya Sewu is expected to generate 3.4 times more return on investment than Tunas Baru. However, PT Sreeya is 3.4 times more volatile than Tunas Baru Lampung. It trades about 0.03 of its potential returns per unit of risk. Tunas Baru Lampung is currently generating about -0.06 per unit of risk. If you would invest  86,000  in PT Sreeya Sewu on September 1, 2024 and sell it today you would earn a total of  1,000.00  from holding PT Sreeya Sewu or generate 1.16% return on investment over 90 days.

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

PT Sreeya Sewu  vs.  Tunas Baru Lampung

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.

Tunas Baru Lampung

Risk-Adjusted Performance

5 of 100

Modest

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

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

The idea behind PT Sreeya Sewu and Tunas Baru Lampung 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.