Correlation Between Sekar Bumi and Sekar Laut

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

Diversification Opportunities for Sekar Bumi and Sekar Laut

0.09

Correlation Coefficient

Sekar Bumi  Sekar Laut

Significant diversification

The 3 months correlation between Sekar and Sekar is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sekar Bumi Tbk and Sekar Laut Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekar Laut Tbk 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 Sekar Laut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekar Laut Tbk has no effect on the direction of Sekar Bumi i.e., Sekar Bumi and Sekar Laut go up and down completely randomly.

Pair Corralation between Sekar Bumi and Sekar Laut

Assuming the 90 days trading horizon Sekar Bumi Tbk is expected to generate 5.08 times more return on investment than Sekar Laut. However, Sekar Bumi is 5.08 times more volatile than Sekar Laut Tbk. It trades about 0.12 of its potential returns per unit of risk. Sekar Laut Tbk is currently generating about -0.04 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sekar Bumi Tbk  vs.  Sekar Laut Tbk

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.

Sekar Laut Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sekar Laut Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sekar Laut disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sekar Bumi and Sekar Laut

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

The idea behind Sekar Bumi Tbk and Sekar Laut 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.