Correlation Between Indosterling Technomedia and Sido Muncul

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

By analyzing existing cross correlation between Indosterling Technomedia Tbk and Sido Muncul PT, you can compare the effects of market volatilities on Indosterling Technomedia and Sido Muncul 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 Indosterling Technomedia with a short position of Sido Muncul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosterling Technomedia and Sido Muncul.

Diversification Opportunities for Indosterling Technomedia and Sido Muncul

0.0

Correlation Coefficient

Indosterling Technomedia  Sido Muncul

Pay attention - limited upside

The 3 months correlation between Indosterling and Sido is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indosterling Technomedia Tbk and Sido Muncul PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sido Muncul PT and Indosterling Technomedia 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 Indosterling Technomedia Tbk are associated (or correlated) with Sido Muncul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sido Muncul PT has no effect on the direction of Indosterling Technomedia i.e., Indosterling Technomedia and Sido Muncul go up and down completely randomly.

Pair Corralation between Indosterling Technomedia and Sido Muncul

If you would invest  57,500  in Sido Muncul PT on November 29, 2024 and sell it today you would earn a total of  2,500  from holding Sido Muncul PT or generate 4.35% return on investment over 90 days.

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

Indosterling Technomedia Tbk  vs.  Sido Muncul PT

Indosterling Technomedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indosterling Technomedia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Indosterling Technomedia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sido Muncul PT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sido Muncul PT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Sido Muncul 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 Indosterling Technomedia and Sido Muncul

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

The idea behind Indosterling Technomedia Tbk and Sido Muncul PT 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.