Correlation Between Sawit Sumbermas and Millennium Pharmacon

Can any of the company-specific risk be diversified away by investing in both Sawit Sumbermas and Millennium Pharmacon 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 Millennium Pharmacon 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 Millennium Pharmacon International, you can compare the effects of market volatilities on Sawit Sumbermas and Millennium Pharmacon 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 Millennium Pharmacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sawit Sumbermas and Millennium Pharmacon.

Diversification Opportunities for Sawit Sumbermas and Millennium Pharmacon

-0.15

Correlation Coefficient

Sawit Sumbermas  Millennium Pharmacon

Good diversification

The 3 months correlation between Sawit and Millennium is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sawit Sumbermas Sarana and Millennium Pharmacon Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millennium Pharmacon 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 Millennium Pharmacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millennium Pharmacon has no effect on the direction of Sawit Sumbermas i.e., Sawit Sumbermas and Millennium Pharmacon go up and down completely randomly.

Pair Corralation between Sawit Sumbermas and Millennium Pharmacon

Assuming the 90 days trading horizon Sawit Sumbermas Sarana is expected to under-perform the Millennium Pharmacon. But the stock apears to be less risky and, when comparing its historical volatility, Sawit Sumbermas Sarana is 1.36 times less risky than Millennium Pharmacon. The stock trades about -0.01 of its potential returns per unit of risk. The Millennium Pharmacon International is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  22,813  in Millennium Pharmacon International on September 4, 2024 and sell it today you would lose (9,313) from holding Millennium Pharmacon International or give up 40.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Sawit Sumbermas Sarana  vs.  Millennium Pharmacon Internati

Sawit Sumbermas Sarana

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sawit Sumbermas Sarana are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Sawit Sumbermas is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Millennium Pharmacon

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Millennium Pharmacon International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Millennium Pharmacon 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 Sawit Sumbermas and Millennium Pharmacon

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

The idea behind Sawit Sumbermas Sarana and Millennium Pharmacon International 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.