Correlation Between PT Sarana and PT Bukalapak

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

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

Diversification Opportunities for PT Sarana and PT Bukalapak

0.41

Correlation Coefficient

PT Sarana  PT Bukalapak

Very weak diversification

The 3 months correlation between TOWR and BUKA is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PT Sarana Menara and PT Bukalapak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bukalapak and PT Sarana 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 PT Sarana Menara are associated (or correlated) with PT Bukalapak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bukalapak has no effect on the direction of PT Sarana i.e., PT Sarana and PT Bukalapak go up and down completely randomly.

Pair Corralation between PT Sarana and PT Bukalapak

Assuming the 90 days trading horizon PT Sarana Menara is expected to generate 0.7 times more return on investment than PT Bukalapak. However, PT Sarana Menara is 1.43 times less risky than PT Bukalapak. It trades about -0.04 of its potential returns per unit of risk. PT Bukalapak is currently generating about -0.04 per unit of risk. If you would invest  109,509  in PT Sarana Menara on October 10, 2024 and sell it today you would lose (40,009) from holding PT Sarana Menara or give up 36.53% of portfolio value over 90 days.

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

PT Sarana Menara  vs.  PT Bukalapak

PT Sarana Menara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Sarana Menara 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.

PT Bukalapak

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bukalapak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Bukalapak 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 PT Sarana and PT Bukalapak

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

The idea behind PT Sarana Menara and PT Bukalapak 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.