Correlation Between Sawit Sumbermas and Kalbe Farma

Can any of the company-specific risk be diversified away by investing in both Sawit Sumbermas and Kalbe Farma 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 Sawit Sumbermas and Kalbe Farma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sawit Sumbermas Sarana and Kalbe Farma Tbk, you can compare the effects of market volatilities on Sawit Sumbermas and Kalbe Farma 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 Sawit Sumbermas with a short position of Kalbe Farma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sawit Sumbermas and Kalbe Farma.

Diversification Opportunities for Sawit Sumbermas and Kalbe Farma

-0.07

Correlation Coefficient

Sawit Sumbermas  Kalbe Farma

Good diversification

The 3 months correlation between Sawit and Kalbe is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sawit Sumbermas Sarana and Kalbe Farma Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalbe Farma Tbk and Sawit Sumbermas 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 Sawit Sumbermas Sarana are associated (or correlated) with Kalbe Farma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalbe Farma Tbk has no effect on the direction of Sawit Sumbermas i.e., Sawit Sumbermas and Kalbe Farma go up and down completely randomly.

Pair Corralation between Sawit Sumbermas and Kalbe Farma

Assuming the 90 days trading horizon Sawit Sumbermas Sarana is expected to generate 2.1 times more return on investment than Kalbe Farma. However, Sawit Sumbermas is 2.1 times more volatile than Kalbe Farma Tbk. It trades about 0.09 of its potential returns per unit of risk. Kalbe Farma Tbk is currently generating about -0.09 per unit of risk. If you would invest  130,000  in Sawit Sumbermas Sarana on December 30, 2024 and sell it today you would earn a total of  30,500  from holding Sawit Sumbermas Sarana or generate 23.46% return on investment over 90 days.

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

Sawit Sumbermas Sarana  vs.  Kalbe Farma Tbk

Sawit Sumbermas Sarana

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sawit Sumbermas Sarana are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sawit Sumbermas disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kalbe Farma Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kalbe Farma 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.

Pair Trading with Sawit Sumbermas and Kalbe Farma

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

The idea behind Sawit Sumbermas Sarana and Kalbe Farma 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.