Correlation Between Solusi Sinergi and Eratex Djaja

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

By analyzing existing cross correlation between Solusi Sinergi Digital and Eratex Djaja Tbk, you can compare the effects of market volatilities on Solusi Sinergi and Eratex Djaja 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 Solusi Sinergi with a short position of Eratex Djaja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solusi Sinergi and Eratex Djaja.

Diversification Opportunities for Solusi Sinergi and Eratex Djaja

-0.75

Correlation Coefficient

Solusi Sinergi  Eratex Djaja

Pay attention - limited upside

The 3 months correlation between Solusi and Eratex is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Solusi Sinergi Digital and Eratex Djaja Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eratex Djaja Tbk and Solusi Sinergi 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 Solusi Sinergi Digital are associated (or correlated) with Eratex Djaja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eratex Djaja Tbk has no effect on the direction of Solusi Sinergi i.e., Solusi Sinergi and Eratex Djaja go up and down completely randomly.

Pair Corralation between Solusi Sinergi and Eratex Djaja

Assuming the 90 days trading horizon Solusi Sinergi Digital is expected to generate 5.12 times more return on investment than Eratex Djaja. However, Solusi Sinergi is 5.12 times more volatile than Eratex Djaja Tbk. It trades about 0.32 of its potential returns per unit of risk. Eratex Djaja Tbk is currently generating about -0.15 per unit of risk. If you would invest  40,400  in Solusi Sinergi Digital on December 22, 2024 and sell it today you would earn a total of  154,100  from holding Solusi Sinergi Digital or generate 381.44% return on investment over 90 days.

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

Solusi Sinergi Digital  vs.  Eratex Djaja Tbk

Solusi Sinergi Digital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Solusi Sinergi Digital are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Solusi Sinergi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Eratex Djaja Tbk

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Solusi Sinergi and Eratex Djaja

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

The idea behind Solusi Sinergi Digital and Eratex Djaja Tbk 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.