Correlation Between Surya Semesta and Megapolitan Developments

Can any of the company-specific risk be diversified away by investing in both Surya Semesta and Megapolitan Developments 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 Surya Semesta and Megapolitan Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Surya Semesta Internusa and Megapolitan Developments Tbk, you can compare the effects of market volatilities on Surya Semesta and Megapolitan Developments 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 Surya Semesta with a short position of Megapolitan Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surya Semesta and Megapolitan Developments.

Diversification Opportunities for Surya Semesta and Megapolitan Developments

0.17

Correlation Coefficient

Surya Semesta  Megapolitan Developments

Average diversification

The 3 months correlation between Surya and Megapolitan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Surya Semesta Internusa and Megapolitan Developments Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapolitan Developments and Surya Semesta 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 Surya Semesta Internusa are associated (or correlated) with Megapolitan Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapolitan Developments has no effect on the direction of Surya Semesta i.e., Surya Semesta and Megapolitan Developments go up and down completely randomly.

Pair Corralation between Surya Semesta and Megapolitan Developments

Assuming the 90 days trading horizon Surya Semesta Internusa is expected to generate 0.57 times more return on investment than Megapolitan Developments. However, Surya Semesta Internusa is 1.76 times less risky than Megapolitan Developments. It trades about 0.1 of its potential returns per unit of risk. Megapolitan Developments Tbk is currently generating about 0.03 per unit of risk. If you would invest  40,954  in Surya Semesta Internusa on October 27, 2024 and sell it today you would earn a total of  63,546  from holding Surya Semesta Internusa or generate 155.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.66%
Values	Daily Returns

Surya Semesta Internusa  vs.  Megapolitan Developments Tbk

Surya Semesta Internusa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surya Semesta Internusa 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.

Megapolitan Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Megapolitan Developments Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Megapolitan Developments 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 Surya Semesta and Megapolitan Developments

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

The idea behind Surya Semesta Internusa and Megapolitan Developments Tbk 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.

Check out your portfolio center.

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.