Correlation Between Selamat Sempurna and Mark Dynamics

Can any of the company-specific risk be diversified away by investing in both Selamat Sempurna and Mark Dynamics 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 Selamat Sempurna and Mark Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Selamat Sempurna Tbk and Mark Dynamics Indonesia, you can compare the effects of market volatilities on Selamat Sempurna and Mark Dynamics 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 Selamat Sempurna with a short position of Mark Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selamat Sempurna and Mark Dynamics.

Diversification Opportunities for Selamat Sempurna and Mark Dynamics

0.77

Correlation Coefficient

Selamat Sempurna  Mark Dynamics

Poor diversification

The 3 months correlation between Selamat and Mark is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Selamat Sempurna Tbk and Mark Dynamics Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mark Dynamics Indonesia and Selamat Sempurna 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 Selamat Sempurna Tbk are associated (or correlated) with Mark Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mark Dynamics Indonesia has no effect on the direction of Selamat Sempurna i.e., Selamat Sempurna and Mark Dynamics go up and down completely randomly.

Pair Corralation between Selamat Sempurna and Mark Dynamics

Assuming the 90 days trading horizon Selamat Sempurna Tbk is expected to under-perform the Mark Dynamics. But the stock apears to be less risky and, when comparing its historical volatility, Selamat Sempurna Tbk is 1.22 times less risky than Mark Dynamics. The stock trades about -0.17 of its potential returns per unit of risk. The Mark Dynamics Indonesia is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  103,000  in Mark Dynamics Indonesia on December 22, 2024 and sell it today you would lose (12,500) from holding Mark Dynamics Indonesia or give up 12.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Selamat Sempurna Tbk  vs.  Mark Dynamics Indonesia

Selamat Sempurna Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Selamat Sempurna Tbk 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Mark Dynamics Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mark Dynamics Indonesia 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Selamat Sempurna and Mark Dynamics

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

The idea behind Selamat Sempurna Tbk and Mark Dynamics Indonesia 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.