Correlation Between Sumber Mas and Total Bangun

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Can any of the company-specific risk be diversified away by investing in both Sumber Mas and Total Bangun 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 Sumber Mas and Total Bangun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumber Mas Konstruksi and Total Bangun Persada, you can compare the effects of market volatilities on Sumber Mas and Total Bangun 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 Sumber Mas with a short position of Total Bangun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Mas and Total Bangun.

Diversification Opportunities for Sumber Mas and Total Bangun

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Sumber and Total is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Mas Konstruksi and Total Bangun Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Bangun Persada and Sumber 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 Sumber Mas Konstruksi are associated (or correlated) with Total Bangun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Bangun Persada has no effect on the direction of Sumber Mas i.e., Sumber Mas and Total Bangun go up and down completely randomly.

Pair Corralation between Sumber Mas and Total Bangun

Assuming the 90 days trading horizon Sumber Mas Konstruksi is expected to under-perform the Total Bangun. In addition to that, Sumber Mas is 3.69 times more volatile than Total Bangun Persada. It trades about -0.2 of its total potential returns per unit of risk. Total Bangun Persada is currently generating about -0.32 per unit of volatility. If you would invest  67,500  in Total Bangun Persada on November 3, 2024 and sell it today you would lose (5,000) from holding Total Bangun Persada or give up 7.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.0%
ValuesDaily Returns

Sumber Mas Konstruksi  vs.  Total Bangun Persada

 Performance 
       Timeline  
Sumber Mas Konstruksi 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sumber Mas Konstruksi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Total Bangun Persada 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Total Bangun Persada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sumber Mas and Total Bangun Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sumber Mas and Total Bangun

The main advantage of trading using opposite Sumber Mas and Total Bangun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumber Mas position performs unexpectedly, Total Bangun 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 Total Bangun will offset losses from the drop in Total Bangun's long position.
The idea behind Sumber Mas Konstruksi and Total Bangun Persada 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.
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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 CEOs Directory module to screen CEOs from public companies around the world.

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