Correlation Between PT Sunter and Widodo Makmur

Can any of the company-specific risk be diversified away by investing in both PT Sunter and Widodo Makmur 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 PT Sunter and Widodo Makmur into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Sunter Lakeside and Widodo Makmur Unggas, you can compare the effects of market volatilities on PT Sunter and Widodo Makmur 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 PT Sunter with a short position of Widodo Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Sunter and Widodo Makmur.

Diversification Opportunities for PT Sunter and Widodo Makmur

0.03

Correlation Coefficient

PT Sunter  Widodo Makmur

Significant diversification

The 3 months correlation between SNLK and Widodo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding PT Sunter Lakeside and Widodo Makmur Unggas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Widodo Makmur Unggas and PT Sunter 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 PT Sunter Lakeside are associated (or correlated) with Widodo Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Widodo Makmur Unggas has no effect on the direction of PT Sunter i.e., PT Sunter and Widodo Makmur go up and down completely randomly.

Pair Corralation between PT Sunter and Widodo Makmur

Assuming the 90 days trading horizon PT Sunter Lakeside is expected to generate 0.84 times more return on investment than Widodo Makmur. However, PT Sunter Lakeside is 1.2 times less risky than Widodo Makmur. It trades about 0.27 of its potential returns per unit of risk. Widodo Makmur Unggas is currently generating about -0.21 per unit of risk. If you would invest  61,500  in PT Sunter Lakeside on December 3, 2024 and sell it today you would earn a total of  14,000  from holding PT Sunter Lakeside or generate 22.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

PT Sunter Lakeside  vs.  Widodo Makmur Unggas

PT Sunter Lakeside

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Sunter Lakeside are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Sunter may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Widodo Makmur Unggas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Widodo Makmur Unggas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Widodo Makmur is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PT Sunter and Widodo Makmur

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

The idea behind PT Sunter Lakeside and Widodo Makmur Unggas 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.