Correlation Between Optima Prima and Alam Sutera
Can any of the company-specific risk be diversified away by investing in both Optima Prima and Alam Sutera 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 Optima Prima and Alam Sutera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optima Prima Metal and Alam Sutera Realty, you can compare the effects of market volatilities on Optima Prima and Alam Sutera 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 Optima Prima with a short position of Alam Sutera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Prima and Alam Sutera.
Diversification Opportunities for Optima Prima and Alam Sutera
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Optima and Alam is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Optima Prima Metal and Alam Sutera Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alam Sutera Realty and Optima Prima 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 Optima Prima Metal are associated (or correlated) with Alam Sutera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alam Sutera Realty has no effect on the direction of Optima Prima i.e., Optima Prima and Alam Sutera go up and down completely randomly.
Pair Corralation between Optima Prima and Alam Sutera
Assuming the 90 days trading horizon Optima Prima Metal is expected to under-perform the Alam Sutera. In addition to that, Optima Prima is 1.69 times more volatile than Alam Sutera Realty. It trades about -0.39 of its total potential returns per unit of risk. Alam Sutera Realty is currently generating about -0.55 per unit of volatility. If you would invest 21,600 in Alam Sutera Realty on August 28, 2024 and sell it today you would lose (5,700) from holding Alam Sutera Realty or give up 26.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Prima Metal vs. Alam Sutera Realty
Performance |
| Timeline |
| Optima Prima Metal |
| Alam Sutera Realty |
Optima Prima and Alam Sutera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Prima and Alam Sutera
The main advantage of trading using opposite Optima Prima and Alam Sutera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Prima position performs unexpectedly, Alam Sutera 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 Alam Sutera will offset losses from the drop in Alam Sutera's long position.| Optima Prima vs. Emdeki Utama Tbk | Optima Prima vs. Nusantara Almazia | Optima Prima vs. Sentral Mitra Informatika | Optima Prima vs. Integra Indocabinet Tbk |
| Alam Sutera vs. Bumi Serpong Damai | Alam Sutera vs. Summarecon Agung Tbk | Alam Sutera vs. Lippo Karawaci Tbk | Alam Sutera vs. Ciputra Development 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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