Correlation Between Sumber Alfaria and Communication Cable
Can any of the company-specific risk be diversified away by investing in both Sumber Alfaria and Communication Cable 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 Sumber Alfaria and Communication Cable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumber Alfaria Trijaya and Communication Cable Systems, you can compare the effects of market volatilities on Sumber Alfaria and Communication Cable 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 Sumber Alfaria with a short position of Communication Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Alfaria and Communication Cable.
Diversification Opportunities for Sumber Alfaria and Communication Cable
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sumber and Communication is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Alfaria Trijaya and Communication Cable Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communication Cable and Sumber Alfaria 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 Sumber Alfaria Trijaya are associated (or correlated) with Communication Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communication Cable has no effect on the direction of Sumber Alfaria i.e., Sumber Alfaria and Communication Cable go up and down completely randomly.
Pair Corralation between Sumber Alfaria and Communication Cable
Assuming the 90 days trading horizon Sumber Alfaria Trijaya is expected to under-perform the Communication Cable. But the stock apears to be less risky and, when comparing its historical volatility, Sumber Alfaria Trijaya is 2.68 times less risky than Communication Cable. The stock trades about -0.18 of its potential returns per unit of risk. The Communication Cable Systems is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 27,600 in Communication Cable Systems on November 27, 2024 and sell it today you would earn a total of 20,600 from holding Communication Cable Systems or generate 74.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumber Alfaria Trijaya vs. Communication Cable Systems
Performance |
| Timeline |
| Sumber Alfaria Trijaya |
| Communication Cable |
Sumber Alfaria and Communication Cable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumber Alfaria and Communication Cable
The main advantage of trading using opposite Sumber Alfaria and Communication Cable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumber Alfaria position performs unexpectedly, Communication Cable 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 Communication Cable will offset losses from the drop in Communication Cable's long position.| Sumber Alfaria vs. Elang Mahkota Teknologi | Sumber Alfaria vs. Ace Hardware Indonesia | Sumber Alfaria vs. BFI Finance Indonesia | Sumber Alfaria vs. Tower Bersama Infrastructure |
| Communication Cable vs. Berkah Prima Perkasa | Communication Cable vs. Hartadinata Abadi Tbk | Communication Cable vs. Estika Tata Tiara | Communication Cable vs. Garudafood Putra Putri |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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