Correlation Between Sejahteraraya Anugrahjaya and Kencana Energi
Can any of the company-specific risk be diversified away by investing in both Sejahteraraya Anugrahjaya and Kencana Energi 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 Sejahteraraya Anugrahjaya and Kencana Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sejahteraraya Anugrahjaya Tbk and Kencana Energi Lestari, you can compare the effects of market volatilities on Sejahteraraya Anugrahjaya and Kencana Energi 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 Sejahteraraya Anugrahjaya with a short position of Kencana Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejahteraraya Anugrahjaya and Kencana Energi.
Diversification Opportunities for Sejahteraraya Anugrahjaya and Kencana Energi
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sejahteraraya and Kencana is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sejahteraraya Anugrahjaya Tbk and Kencana Energi Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kencana Energi Lestari and Sejahteraraya Anugrahjaya 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 Sejahteraraya Anugrahjaya Tbk are associated (or correlated) with Kencana Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kencana Energi Lestari has no effect on the direction of Sejahteraraya Anugrahjaya i.e., Sejahteraraya Anugrahjaya and Kencana Energi go up and down completely randomly.
Pair Corralation between Sejahteraraya Anugrahjaya and Kencana Energi
Assuming the 90 days trading horizon Sejahteraraya Anugrahjaya Tbk is expected to under-perform the Kencana Energi. In addition to that, Sejahteraraya Anugrahjaya is 1.9 times more volatile than Kencana Energi Lestari. It trades about -0.23 of its total potential returns per unit of risk. Kencana Energi Lestari is currently generating about -0.11 per unit of volatility. If you would invest 65,500 in Kencana Energi Lestari on August 31, 2024 and sell it today you would lose (2,000) from holding Kencana Energi Lestari or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sejahteraraya Anugrahjaya Tbk vs. Kencana Energi Lestari
Performance |
| Timeline |
| Sejahteraraya Anugrahjaya |
| Kencana Energi Lestari |
Sejahteraraya Anugrahjaya and Kencana Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sejahteraraya Anugrahjaya and Kencana Energi
The main advantage of trading using opposite Sejahteraraya Anugrahjaya and Kencana Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sejahteraraya Anugrahjaya position performs unexpectedly, Kencana Energi 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 Kencana Energi will offset losses from the drop in Kencana Energi's long position.The idea behind Sejahteraraya Anugrahjaya Tbk and Kencana Energi Lestari 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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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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