Correlation Between Sejahteraraya Anugrahjaya and Langgeng Makmur
Can any of the company-specific risk be diversified away by investing in both Sejahteraraya Anugrahjaya and Langgeng Makmur 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 Langgeng Makmur 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 Langgeng Makmur Industri, you can compare the effects of market volatilities on Sejahteraraya Anugrahjaya and Langgeng Makmur 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 Langgeng Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sejahteraraya Anugrahjaya and Langgeng Makmur.
Diversification Opportunities for Sejahteraraya Anugrahjaya and Langgeng Makmur
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sejahteraraya and Langgeng is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sejahteraraya Anugrahjaya Tbk and Langgeng Makmur Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Langgeng Makmur Industri 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 Langgeng Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Langgeng Makmur Industri has no effect on the direction of Sejahteraraya Anugrahjaya i.e., Sejahteraraya Anugrahjaya and Langgeng Makmur go up and down completely randomly.
Pair Corralation between Sejahteraraya Anugrahjaya and Langgeng Makmur
Assuming the 90 days trading horizon Sejahteraraya Anugrahjaya is expected to generate 1.85 times less return on investment than Langgeng Makmur. But when comparing it to its historical volatility, Sejahteraraya Anugrahjaya Tbk is 4.58 times less risky than Langgeng Makmur. It trades about 0.21 of its potential returns per unit of risk. Langgeng Makmur Industri is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,500 in Langgeng Makmur Industri on August 30, 2024 and sell it today you would earn a total of 5,900 from holding Langgeng Makmur Industri or generate 62.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sejahteraraya Anugrahjaya Tbk vs. Langgeng Makmur Industri
Performance |
| Timeline |
| Sejahteraraya Anugrahjaya |
| Langgeng Makmur Industri |
Sejahteraraya Anugrahjaya and Langgeng Makmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sejahteraraya Anugrahjaya and Langgeng Makmur
The main advantage of trading using opposite Sejahteraraya Anugrahjaya and Langgeng Makmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sejahteraraya Anugrahjaya position performs unexpectedly, Langgeng Makmur 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 Langgeng Makmur will offset losses from the drop in Langgeng Makmur's long position.The idea behind Sejahteraraya Anugrahjaya Tbk and Langgeng Makmur Industri 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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