Correlation Between Sinar Mas and Indosat Tbk
Can any of the company-specific risk be diversified away by investing in both Sinar Mas and Indosat Tbk 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 Sinar Mas and Indosat Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinar Mas Agro and Indosat Tbk, you can compare the effects of market volatilities on Sinar Mas and Indosat Tbk 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 Sinar Mas with a short position of Indosat Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinar Mas and Indosat Tbk.
Diversification Opportunities for Sinar Mas and Indosat Tbk
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sinar and Indosat is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sinar Mas Agro and Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indosat Tbk and Sinar Mas 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 Sinar Mas Agro are associated (or correlated) with Indosat Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indosat Tbk has no effect on the direction of Sinar Mas i.e., Sinar Mas and Indosat Tbk go up and down completely randomly.
Pair Corralation between Sinar Mas and Indosat Tbk
Assuming the 90 days trading horizon Sinar Mas Agro is expected to generate 0.28 times more return on investment than Indosat Tbk. However, Sinar Mas Agro is 3.55 times less risky than Indosat Tbk. It trades about 0.01 of its potential returns per unit of risk. Indosat Tbk is currently generating about -0.05 per unit of risk. If you would invest 365,871 in Sinar Mas Agro on September 3, 2024 and sell it today you would earn a total of 9,129 from holding Sinar Mas Agro or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinar Mas Agro vs. Indosat Tbk
Performance |
| Timeline |
| Sinar Mas Agro |
| Indosat Tbk |
Sinar Mas and Indosat Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinar Mas and Indosat Tbk
The main advantage of trading using opposite Sinar Mas and Indosat Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinar Mas position performs unexpectedly, Indosat Tbk 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 Indosat Tbk will offset losses from the drop in Indosat Tbk's long position.| Sinar Mas vs. Sampoerna Agro Tbk | Sinar Mas vs. Tunas Baru Lampung | Sinar Mas vs. Perusahaan Perkebunan London | Sinar Mas vs. Bakrie Sumatera Plantations |
| Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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