Correlation Between Surya Permata and Sarana Meditama
Can any of the company-specific risk be diversified away by investing in both Surya Permata and Sarana Meditama 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 Surya Permata and Sarana Meditama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Surya Permata Andalan and Sarana Meditama Metropolitan, you can compare the effects of market volatilities on Surya Permata and Sarana Meditama 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 Surya Permata with a short position of Sarana Meditama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surya Permata and Sarana Meditama.
Diversification Opportunities for Surya Permata and Sarana Meditama
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Surya and Sarana is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Surya Permata Andalan and Sarana Meditama Metropolitan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarana Meditama Metr and Surya Permata 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 Surya Permata Andalan are associated (or correlated) with Sarana Meditama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarana Meditama Metr has no effect on the direction of Surya Permata i.e., Surya Permata and Sarana Meditama go up and down completely randomly.
Pair Corralation between Surya Permata and Sarana Meditama
Assuming the 90 days trading horizon Surya Permata Andalan is expected to generate 0.7 times more return on investment than Sarana Meditama. However, Surya Permata Andalan is 1.42 times less risky than Sarana Meditama. It trades about -0.24 of its potential returns per unit of risk. Sarana Meditama Metropolitan is currently generating about -0.2 per unit of risk. If you would invest 15,000 in Surya Permata Andalan on August 29, 2024 and sell it today you would lose (1,400) from holding Surya Permata Andalan or give up 9.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Surya Permata Andalan vs. Sarana Meditama Metropolitan
Performance |
| Timeline |
| Surya Permata Andalan |
| Sarana Meditama Metr |
Surya Permata and Sarana Meditama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Surya Permata and Sarana Meditama
The main advantage of trading using opposite Surya Permata and Sarana Meditama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surya Permata position performs unexpectedly, Sarana Meditama 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 Sarana Meditama will offset losses from the drop in Sarana Meditama's long position.| Surya Permata vs. Jasa Armada Indonesia | Surya Permata vs. Cahayaputra Asa Keramik | Surya Permata vs. Campina Ice Cream |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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