Correlation Between Saratoga Investama and Sawit Sumbermas

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Can any of the company-specific risk be diversified away by investing in both Saratoga Investama and Sawit Sumbermas 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 Saratoga Investama and Sawit Sumbermas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saratoga Investama Sedaya and Sawit Sumbermas Sarana, you can compare the effects of market volatilities on Saratoga Investama and Sawit Sumbermas 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 Saratoga Investama with a short position of Sawit Sumbermas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saratoga Investama and Sawit Sumbermas.

Diversification Opportunities for Saratoga Investama and Sawit Sumbermas

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Saratoga and Sawit is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Saratoga Investama Sedaya and Sawit Sumbermas Sarana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sawit Sumbermas Sarana and Saratoga Investama 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 Saratoga Investama Sedaya are associated (or correlated) with Sawit Sumbermas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sawit Sumbermas Sarana has no effect on the direction of Saratoga Investama i.e., Saratoga Investama and Sawit Sumbermas go up and down completely randomly.

Pair Corralation between Saratoga Investama and Sawit Sumbermas

Assuming the 90 days trading horizon Saratoga Investama is expected to generate 7.74 times less return on investment than Sawit Sumbermas. But when comparing it to its historical volatility, Saratoga Investama Sedaya is 1.24 times less risky than Sawit Sumbermas. It trades about 0.0 of its potential returns per unit of risk. Sawit Sumbermas Sarana is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  150,782  in Sawit Sumbermas Sarana on November 20, 2024 and sell it today you would earn a total of  23,718  from holding Sawit Sumbermas Sarana or generate 15.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Saratoga Investama Sedaya  vs.  Sawit Sumbermas Sarana

 Performance 
       Timeline  
Saratoga Investama Sedaya 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Saratoga Investama Sedaya 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 March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Sawit Sumbermas Sarana 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sawit Sumbermas Sarana are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Sawit Sumbermas disclosed solid returns over the last few months and may actually be approaching a breakup point.

Saratoga Investama and Sawit Sumbermas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Saratoga Investama and Sawit Sumbermas

The main advantage of trading using opposite Saratoga Investama and Sawit Sumbermas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saratoga Investama position performs unexpectedly, Sawit Sumbermas 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 Sawit Sumbermas will offset losses from the drop in Sawit Sumbermas' long position.
The idea behind Saratoga Investama Sedaya and Sawit Sumbermas Sarana 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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