Correlation Between Selamat Sempurna and Cikarang Listrindo
Can any of the company-specific risk be diversified away by investing in both Selamat Sempurna and Cikarang Listrindo 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 Selamat Sempurna and Cikarang Listrindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selamat Sempurna Tbk and Cikarang Listrindo Tbk, you can compare the effects of market volatilities on Selamat Sempurna and Cikarang Listrindo 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 Selamat Sempurna with a short position of Cikarang Listrindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selamat Sempurna and Cikarang Listrindo.
Diversification Opportunities for Selamat Sempurna and Cikarang Listrindo
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Selamat and Cikarang is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Selamat Sempurna Tbk and Cikarang Listrindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cikarang Listrindo Tbk and Selamat Sempurna 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 Selamat Sempurna Tbk are associated (or correlated) with Cikarang Listrindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cikarang Listrindo Tbk has no effect on the direction of Selamat Sempurna i.e., Selamat Sempurna and Cikarang Listrindo go up and down completely randomly.
Pair Corralation between Selamat Sempurna and Cikarang Listrindo
Assuming the 90 days trading horizon Selamat Sempurna Tbk is expected to under-perform the Cikarang Listrindo. In addition to that, Selamat Sempurna is 2.41 times more volatile than Cikarang Listrindo Tbk. It trades about -0.16 of its total potential returns per unit of risk. Cikarang Listrindo Tbk is currently generating about -0.06 per unit of volatility. If you would invest 70,500 in Cikarang Listrindo Tbk on August 25, 2024 and sell it today you would lose (500.00) from holding Cikarang Listrindo Tbk or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selamat Sempurna Tbk vs. Cikarang Listrindo Tbk
Performance |
| Timeline |
| Selamat Sempurna Tbk |
| Cikarang Listrindo Tbk |
Selamat Sempurna and Cikarang Listrindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selamat Sempurna and Cikarang Listrindo
The main advantage of trading using opposite Selamat Sempurna and Cikarang Listrindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selamat Sempurna position performs unexpectedly, Cikarang Listrindo 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 Cikarang Listrindo will offset losses from the drop in Cikarang Listrindo's long position.The idea behind Selamat Sempurna Tbk and Cikarang Listrindo 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.| Cikarang Listrindo vs. Aneka Tambang Persero | Cikarang Listrindo vs. Bukit Asam Tbk | Cikarang Listrindo vs. Telkom Indonesia Tbk | Cikarang Listrindo vs. Astra International 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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