Correlation Between Sona Topas and PT Bank

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

By analyzing existing cross correlation between Sona Topas Tourism and PT Bank Bisnis, you can compare the effects of market volatilities on Sona Topas and PT Bank 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 Sona Topas with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sona Topas and PT Bank.

Diversification Opportunities for Sona Topas and PT Bank

-0.48

Correlation Coefficient

Sona Topas  PT Bank

Very good diversification

The 3 months correlation between Sona and BBSI is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sona Topas Tourism and PT Bank Bisnis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Bisnis and Sona Topas 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 Sona Topas Tourism are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Bisnis has no effect on the direction of Sona Topas i.e., Sona Topas and PT Bank go up and down completely randomly.

Pair Corralation between Sona Topas and PT Bank

Assuming the 90 days trading horizon Sona Topas Tourism is expected to under-perform the PT Bank. In addition to that, Sona Topas is 9.36 times more volatile than PT Bank Bisnis. It trades about -0.04 of its total potential returns per unit of risk. PT Bank Bisnis is currently generating about -0.13 per unit of volatility. If you would invest  420,000  in PT Bank Bisnis on December 4, 2024 and sell it today you would lose (40,000) from holding PT Bank Bisnis or give up 9.52% of portfolio value over 90 days.

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

Sona Topas Tourism  vs.  PT Bank Bisnis

Sona Topas Tourism

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sona Topas Tourism 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.

PT Bank Bisnis

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank Bisnis 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.

Pair Trading with Sona Topas and PT Bank

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

The idea behind Sona Topas Tourism and PT Bank Bisnis 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.