Correlation Between Sumi Indo and Indomobil Sukses
Can any of the company-specific risk be diversified away by investing in both Sumi Indo and Indomobil Sukses 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 Sumi Indo and Indomobil Sukses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumi Indo Kabel and Indomobil Sukses Internasional, you can compare the effects of market volatilities on Sumi Indo and Indomobil Sukses 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 Sumi Indo with a short position of Indomobil Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumi Indo and Indomobil Sukses.
Diversification Opportunities for Sumi Indo and Indomobil Sukses
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sumi and Indomobil is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sumi Indo Kabel and Indomobil Sukses Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indomobil Sukses Int and Sumi Indo 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 Sumi Indo Kabel are associated (or correlated) with Indomobil Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indomobil Sukses Int has no effect on the direction of Sumi Indo i.e., Sumi Indo and Indomobil Sukses go up and down completely randomly.
Pair Corralation between Sumi Indo and Indomobil Sukses
Assuming the 90 days trading horizon Sumi Indo Kabel is expected to generate 0.31 times more return on investment than Indomobil Sukses. However, Sumi Indo Kabel is 3.26 times less risky than Indomobil Sukses. It trades about -0.18 of its potential returns per unit of risk. Indomobil Sukses Internasional is currently generating about -0.4 per unit of risk. If you would invest 41,800 in Sumi Indo Kabel on August 28, 2024 and sell it today you would lose (1,400) from holding Sumi Indo Kabel or give up 3.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumi Indo Kabel vs. Indomobil Sukses Internasional
Performance |
| Timeline |
| Sumi Indo Kabel |
| Indomobil Sukses Int |
Sumi Indo and Indomobil Sukses Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumi Indo and Indomobil Sukses
The main advantage of trading using opposite Sumi Indo and Indomobil Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumi Indo position performs unexpectedly, Indomobil Sukses 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 Indomobil Sukses will offset losses from the drop in Indomobil Sukses' long position.The idea behind Sumi Indo Kabel and Indomobil Sukses Internasional 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.| Indomobil Sukses vs. Gajah Tunggal Tbk | Indomobil Sukses vs. Astra Otoparts Tbk | Indomobil Sukses vs. Harum Energy Tbk | Indomobil Sukses vs. Akr Corporindo Tbk |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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