Correlation Between Sekar Bumi and Campina Ice

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

By analyzing existing cross correlation between Sekar Bumi Tbk and Campina Ice Cream, you can compare the effects of market volatilities on Sekar Bumi and Campina Ice 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 Sekar Bumi with a short position of Campina Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekar Bumi and Campina Ice.

Diversification Opportunities for Sekar Bumi and Campina Ice

-0.2

Correlation Coefficient

Sekar Bumi  Campina Ice

Good diversification

The 3 months correlation between Sekar and Campina is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sekar Bumi Tbk and Campina Ice Cream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campina Ice Cream and Sekar Bumi 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 Sekar Bumi Tbk are associated (or correlated) with Campina Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campina Ice Cream has no effect on the direction of Sekar Bumi i.e., Sekar Bumi and Campina Ice go up and down completely randomly.

Pair Corralation between Sekar Bumi and Campina Ice

Assuming the 90 days trading horizon Sekar Bumi Tbk is expected to generate 8.42 times more return on investment than Campina Ice. However, Sekar Bumi is 8.42 times more volatile than Campina Ice Cream. It trades about 0.12 of its potential returns per unit of risk. Campina Ice Cream is currently generating about -0.4 per unit of risk. If you would invest  38,000  in Sekar Bumi Tbk on October 12, 2024 and sell it today you would earn a total of  5,200  from holding Sekar Bumi Tbk or generate 13.68% return on investment over 90 days.

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

Sekar Bumi Tbk  vs.  Campina Ice Cream

Sekar Bumi Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sekar Bumi Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sekar Bumi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Campina Ice Cream

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Campina Ice Cream has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Sekar Bumi and Campina Ice

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

The idea behind Sekar Bumi Tbk and Campina Ice Cream 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..