Correlation Between Sinar Mas and Asuransi Jiwa

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

By analyzing existing cross correlation between Sinar Mas Multiartha and Asuransi Jiwa Sinarmas, you can compare the effects of market volatilities on Sinar Mas and Asuransi Jiwa 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 Sinar Mas with a short position of Asuransi Jiwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinar Mas and Asuransi Jiwa.

Diversification Opportunities for Sinar Mas and Asuransi Jiwa

-0.05

Correlation Coefficient

Sinar Mas  Asuransi Jiwa

Good diversification

The 3 months correlation between Sinar and Asuransi is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sinar Mas Multiartha and Asuransi Jiwa Sinarmas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Jiwa Sinarmas and Sinar Mas 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 Sinar Mas Multiartha are associated (or correlated) with Asuransi Jiwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Jiwa Sinarmas has no effect on the direction of Sinar Mas i.e., Sinar Mas and Asuransi Jiwa go up and down completely randomly.

Pair Corralation between Sinar Mas and Asuransi Jiwa

Assuming the 90 days trading horizon Sinar Mas is expected to generate 45.07 times less return on investment than Asuransi Jiwa. But when comparing it to its historical volatility, Sinar Mas Multiartha is 24.69 times less risky than Asuransi Jiwa. It trades about 0.04 of its potential returns per unit of risk. Asuransi Jiwa Sinarmas is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  602,500  in Asuransi Jiwa Sinarmas on September 3, 2024 and sell it today you would earn a total of  127,500  from holding Asuransi Jiwa Sinarmas or generate 21.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Sinar Mas Multiartha  vs.  Asuransi Jiwa Sinarmas

Sinar Mas Multiartha

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sinar Mas Multiartha are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Sinar Mas is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asuransi Jiwa Sinarmas

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asuransi Jiwa Sinarmas are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Asuransi Jiwa disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sinar Mas and Asuransi Jiwa

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

The idea behind Sinar Mas Multiartha and Asuransi Jiwa Sinarmas 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.