Correlation Between Satyamitra Kemas and Indonesia Fibreboard

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

By analyzing existing cross correlation between Satyamitra Kemas Lestari and Indonesia Fibreboard Industry, you can compare the effects of market volatilities on Satyamitra Kemas and Indonesia Fibreboard 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 Satyamitra Kemas with a short position of Indonesia Fibreboard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Satyamitra Kemas and Indonesia Fibreboard.

Diversification Opportunities for Satyamitra Kemas and Indonesia Fibreboard

-0.76

Correlation Coefficient

Satyamitra Kemas  Indonesia Fibreboard

Pay attention - limited upside

The 3 months correlation between Satyamitra and Indonesia is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Satyamitra Kemas Lestari and Indonesia Fibreboard Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesia Fibreboard and Satyamitra Kemas 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 Satyamitra Kemas Lestari are associated (or correlated) with Indonesia Fibreboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesia Fibreboard has no effect on the direction of Satyamitra Kemas i.e., Satyamitra Kemas and Indonesia Fibreboard go up and down completely randomly.

Pair Corralation between Satyamitra Kemas and Indonesia Fibreboard

Assuming the 90 days trading horizon Satyamitra Kemas Lestari is expected to under-perform the Indonesia Fibreboard. But the stock apears to be less risky and, when comparing its historical volatility, Satyamitra Kemas Lestari is 1.83 times less risky than Indonesia Fibreboard. The stock trades about -0.16 of its potential returns per unit of risk. The Indonesia Fibreboard Industry is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  18,242  in Indonesia Fibreboard Industry on September 12, 2024 and sell it today you would earn a total of  2,758  from holding Indonesia Fibreboard Industry or generate 15.12% return on investment over 90 days.

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

Satyamitra Kemas Lestari  vs.  Indonesia Fibreboard Industry

Satyamitra Kemas Lestari

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Satyamitra Kemas Lestari 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.

Indonesia Fibreboard

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indonesia Fibreboard Industry are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Indonesia Fibreboard disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Satyamitra Kemas and Indonesia Fibreboard

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

The idea behind Satyamitra Kemas Lestari and Indonesia Fibreboard Industry 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.