Correlation Between Sriwahana and Madusari Murni

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

By analyzing existing cross correlation between Sriwahana and Madusari Murni Indah, you can compare the effects of market volatilities on Sriwahana and Madusari Murni 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 Sriwahana with a short position of Madusari Murni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sriwahana and Madusari Murni.

Diversification Opportunities for Sriwahana and Madusari Murni

0.71

Correlation Coefficient

Sriwahana  Madusari Murni

Poor diversification

The 3 months correlation between Sriwahana and Madusari is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sriwahana and Madusari Murni Indah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madusari Murni Indah and Sriwahana 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 Sriwahana are associated (or correlated) with Madusari Murni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madusari Murni Indah has no effect on the direction of Sriwahana i.e., Sriwahana and Madusari Murni go up and down completely randomly.

Pair Corralation between Sriwahana and Madusari Murni

Assuming the 90 days trading horizon Sriwahana is expected to under-perform the Madusari Murni. In addition to that, Sriwahana is 1.33 times more volatile than Madusari Murni Indah. It trades about -0.06 of its total potential returns per unit of risk. Madusari Murni Indah is currently generating about -0.04 per unit of volatility. If you would invest  38,295  in Madusari Murni Indah on October 27, 2024 and sell it today you would lose (17,695) from holding Madusari Murni Indah or give up 46.21% of portfolio value over 90 days.

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

Sriwahana  vs.  Madusari Murni Indah

Sriwahana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sriwahana 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Madusari Murni Indah

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Madusari Murni Indah 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Sriwahana and Madusari Murni

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

The idea behind Sriwahana and Madusari Murni Indah 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.