Correlation Between Sunny Optical and PT Bank

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

By analyzing existing cross correlation between Sunny Optical Technology and PT Bank Mandiri, you can compare the effects of market volatilities on Sunny Optical and PT Bank 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 Sunny Optical with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and PT Bank.

Diversification Opportunities for Sunny Optical and PT Bank

-0.78

Correlation Coefficient

Sunny Optical  PT Bank

Pay attention - limited upside

The 3 months correlation between Sunny and PQ9 is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and PT Bank Mandiri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Mandiri and Sunny Optical 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 Sunny Optical Technology are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Mandiri has no effect on the direction of Sunny Optical i.e., Sunny Optical and PT Bank go up and down completely randomly.

Pair Corralation between Sunny Optical and PT Bank

Assuming the 90 days horizon Sunny Optical is expected to generate 5.49 times less return on investment than PT Bank. But when comparing it to its historical volatility, Sunny Optical Technology is 1.33 times less risky than PT Bank. It trades about 0.01 of its potential returns per unit of risk. PT Bank Mandiri is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  27.00  in PT Bank Mandiri on October 4, 2024 and sell it today you would earn a total of  9.00  from holding PT Bank Mandiri or generate 33.33% return on investment over 90 days.

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

Sunny Optical Technology  vs.  PT Bank Mandiri

Sunny Optical Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunny Optical Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Sunny Optical reported solid returns over the last few months and may actually be approaching a breakup point.

PT Bank Mandiri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Mandiri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sunny Optical and PT Bank

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

The idea behind Sunny Optical Technology and PT Bank Mandiri 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.