Correlation Between Supreme Cable and Ristia Bintang
Can any of the company-specific risk be diversified away by investing in both Supreme Cable and Ristia Bintang 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 Supreme Cable and Ristia Bintang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supreme Cable Manufacturing and Ristia Bintang Mahkotasejati, you can compare the effects of market volatilities on Supreme Cable and Ristia Bintang 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 Supreme Cable with a short position of Ristia Bintang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supreme Cable and Ristia Bintang.
Diversification Opportunities for Supreme Cable and Ristia Bintang
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Supreme and Ristia is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Supreme Cable Manufacturing and Ristia Bintang Mahkotasejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ristia Bintang Mahko and Supreme Cable 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 Supreme Cable Manufacturing are associated (or correlated) with Ristia Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ristia Bintang Mahko has no effect on the direction of Supreme Cable i.e., Supreme Cable and Ristia Bintang go up and down completely randomly.
Pair Corralation between Supreme Cable and Ristia Bintang
Assuming the 90 days trading horizon Supreme Cable Manufacturing is expected to under-perform the Ristia Bintang. But the stock apears to be less risky and, when comparing its historical volatility, Supreme Cable Manufacturing is 1.86 times less risky than Ristia Bintang. The stock trades about -0.03 of its potential returns per unit of risk. The Ristia Bintang Mahkotasejati is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,100 in Ristia Bintang Mahkotasejati on August 24, 2024 and sell it today you would earn a total of 100.00 from holding Ristia Bintang Mahkotasejati or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supreme Cable Manufacturing vs. Ristia Bintang Mahkotasejati
Performance |
| Timeline |
| Supreme Cable Manufa |
| Ristia Bintang Mahko |
Supreme Cable and Ristia Bintang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supreme Cable and Ristia Bintang
The main advantage of trading using opposite Supreme Cable and Ristia Bintang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supreme Cable position performs unexpectedly, Ristia Bintang 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 Ristia Bintang will offset losses from the drop in Ristia Bintang's long position.| Supreme Cable vs. Voksel Electric Tbk | Supreme Cable vs. Kmi Wire And | Supreme Cable vs. Kabelindo Murni Tbk | Supreme Cable vs. Selamat Sempurna Tbk |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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