Correlation Between Sumber Alfaria and Geoprima Solusi
Can any of the company-specific risk be diversified away by investing in both Sumber Alfaria and Geoprima Solusi 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 Geoprima Solusi 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 Geoprima Solusi Tbk, you can compare the effects of market volatilities on Sumber Alfaria and Geoprima Solusi 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 Geoprima Solusi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Alfaria and Geoprima Solusi.
Diversification Opportunities for Sumber Alfaria and Geoprima Solusi
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sumber and Geoprima is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Alfaria Trijaya and Geoprima Solusi Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geoprima Solusi Tbk 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 Geoprima Solusi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geoprima Solusi Tbk has no effect on the direction of Sumber Alfaria i.e., Sumber Alfaria and Geoprima Solusi go up and down completely randomly.
Pair Corralation between Sumber Alfaria and Geoprima Solusi
Assuming the 90 days trading horizon Sumber Alfaria is expected to generate 17.33 times less return on investment than Geoprima Solusi. But when comparing it to its historical volatility, Sumber Alfaria Trijaya is 3.64 times less risky than Geoprima Solusi. It trades about 0.02 of its potential returns per unit of risk. Geoprima Solusi Tbk is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11,000 in Geoprima Solusi Tbk on September 2, 2024 and sell it today you would earn a total of 24,600 from holding Geoprima Solusi Tbk or generate 223.64% 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. Geoprima Solusi Tbk
Performance |
| Timeline |
| Sumber Alfaria Trijaya |
| Geoprima Solusi Tbk |
Sumber Alfaria and Geoprima Solusi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumber Alfaria and Geoprima Solusi
The main advantage of trading using opposite Sumber Alfaria and Geoprima Solusi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumber Alfaria position performs unexpectedly, Geoprima Solusi 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 Geoprima Solusi will offset losses from the drop in Geoprima Solusi'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 |
| Geoprima Solusi vs. Integra Indocabinet Tbk | Geoprima Solusi vs. Multistrada Arah Sarana | Geoprima Solusi vs. PT MNC Energy | Geoprima Solusi vs. J Resources Asia |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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