Correlation Between Sawit Sumbermas and Aman Agrindo
Can any of the company-specific risk be diversified away by investing in both Sawit Sumbermas and Aman Agrindo 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 Sawit Sumbermas and Aman Agrindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sawit Sumbermas Sarana and Aman Agrindo, you can compare the effects of market volatilities on Sawit Sumbermas and Aman Agrindo 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 Sawit Sumbermas with a short position of Aman Agrindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sawit Sumbermas and Aman Agrindo.
Diversification Opportunities for Sawit Sumbermas and Aman Agrindo
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sawit and Aman is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sawit Sumbermas Sarana and Aman Agrindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aman Agrindo and Sawit Sumbermas 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 Sawit Sumbermas Sarana are associated (or correlated) with Aman Agrindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aman Agrindo has no effect on the direction of Sawit Sumbermas i.e., Sawit Sumbermas and Aman Agrindo go up and down completely randomly.
Pair Corralation between Sawit Sumbermas and Aman Agrindo
Assuming the 90 days trading horizon Sawit Sumbermas Sarana is expected to under-perform the Aman Agrindo. But the stock apears to be less risky and, when comparing its historical volatility, Sawit Sumbermas Sarana is 1.58 times less risky than Aman Agrindo. The stock trades about -0.01 of its potential returns per unit of risk. The Aman Agrindo is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 41,400 in Aman Agrindo on August 27, 2024 and sell it today you would lose (6,600) from holding Aman Agrindo or give up 15.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sawit Sumbermas Sarana vs. Aman Agrindo
Performance |
| Timeline |
| Sawit Sumbermas Sarana |
| Aman Agrindo |
Sawit Sumbermas and Aman Agrindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sawit Sumbermas and Aman Agrindo
The main advantage of trading using opposite Sawit Sumbermas and Aman Agrindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sawit Sumbermas position performs unexpectedly, Aman Agrindo 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 Aman Agrindo will offset losses from the drop in Aman Agrindo's long position.The idea behind Sawit Sumbermas Sarana and Aman Agrindo 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.| Aman Agrindo vs. Dharma Satya Nusantara | Aman Agrindo vs. Saratoga Investama Sedaya | Aman Agrindo vs. Surya Esa Perkasa | Aman Agrindo vs. Elang Mahkota Teknologi |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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