Correlation Between Steady Safe and Samudera Indonesia
Can any of the company-specific risk be diversified away by investing in both Steady Safe and Samudera Indonesia 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 Steady Safe and Samudera Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steady Safe TBK and Samudera Indonesia Tbk, you can compare the effects of market volatilities on Steady Safe and Samudera Indonesia 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 Steady Safe with a short position of Samudera Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steady Safe and Samudera Indonesia.
Diversification Opportunities for Steady Safe and Samudera Indonesia
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Steady and Samudera is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Steady Safe TBK and Samudera Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samudera Indonesia Tbk and Steady Safe 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 Steady Safe TBK are associated (or correlated) with Samudera Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samudera Indonesia Tbk has no effect on the direction of Steady Safe i.e., Steady Safe and Samudera Indonesia go up and down completely randomly.
Pair Corralation between Steady Safe and Samudera Indonesia
Assuming the 90 days trading horizon Steady Safe TBK is expected to under-perform the Samudera Indonesia. In addition to that, Steady Safe is 3.24 times more volatile than Samudera Indonesia Tbk. It trades about -0.39 of its total potential returns per unit of risk. Samudera Indonesia Tbk is currently generating about -0.4 per unit of volatility. If you would invest 33,600 in Samudera Indonesia Tbk on August 28, 2024 and sell it today you would lose (4,800) from holding Samudera Indonesia Tbk or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steady Safe TBK vs. Samudera Indonesia Tbk
Performance |
| Timeline |
| Steady Safe TBK |
| Samudera Indonesia Tbk |
Steady Safe and Samudera Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steady Safe and Samudera Indonesia
The main advantage of trading using opposite Steady Safe and Samudera Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steady Safe position performs unexpectedly, Samudera Indonesia 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 Samudera Indonesia will offset losses from the drop in Samudera Indonesia's long position.The idea behind Steady Safe TBK and Samudera Indonesia Tbk 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.| Samudera Indonesia vs. PT Temas Tbk | Samudera Indonesia vs. Petrosea Tbk | Samudera Indonesia vs. Rig Tenders Tbk | Samudera Indonesia vs. Rukun Raharja 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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