Correlation Between Tunas Baru and Sinar Mas
Can any of the company-specific risk be diversified away by investing in both Tunas Baru and Sinar Mas 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 Tunas Baru and Sinar Mas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tunas Baru Lampung and Sinar Mas Agro, you can compare the effects of market volatilities on Tunas Baru and Sinar Mas 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 Tunas Baru with a short position of Sinar Mas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tunas Baru and Sinar Mas.
Diversification Opportunities for Tunas Baru and Sinar Mas
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tunas and Sinar is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tunas Baru Lampung and Sinar Mas Agro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinar Mas Agro and Tunas Baru 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 Tunas Baru Lampung are associated (or correlated) with Sinar Mas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinar Mas Agro has no effect on the direction of Tunas Baru i.e., Tunas Baru and Sinar Mas go up and down completely randomly.
Pair Corralation between Tunas Baru and Sinar Mas
Assuming the 90 days trading horizon Tunas Baru Lampung is expected to generate 1.27 times more return on investment than Sinar Mas. However, Tunas Baru is 1.27 times more volatile than Sinar Mas Agro. It trades about 0.02 of its potential returns per unit of risk. Sinar Mas Agro is currently generating about -0.02 per unit of risk. If you would invest 57,617 in Tunas Baru Lampung on August 31, 2024 and sell it today you would earn a total of 5,383 from holding Tunas Baru Lampung or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Tunas Baru Lampung vs. Sinar Mas Agro
Performance |
| Timeline |
| Tunas Baru Lampung |
| Sinar Mas Agro |
Tunas Baru and Sinar Mas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tunas Baru and Sinar Mas
The main advantage of trading using opposite Tunas Baru and Sinar Mas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tunas Baru position performs unexpectedly, Sinar Mas 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 Sinar Mas will offset losses from the drop in Sinar Mas' long position.| Tunas Baru vs. Bakrie Sumatera Plantations | Tunas Baru vs. Sampoerna Agro Tbk | Tunas Baru vs. Perusahaan Perkebunan London | Tunas Baru vs. Timah Persero Tbk |
| Sinar Mas vs. Sampoerna Agro Tbk | Sinar Mas vs. Tunas Baru Lampung | Sinar Mas vs. Perusahaan Perkebunan London | Sinar Mas vs. Bakrie Sumatera Plantations |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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