Correlation Between Surya Toto and Adi Sarana

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Can any of the company-specific risk be diversified away by investing in both Surya Toto and Adi Sarana 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 Surya Toto and Adi Sarana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Surya Toto Indonesia and Adi Sarana Armada, you can compare the effects of market volatilities on Surya Toto and Adi Sarana 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 Surya Toto with a short position of Adi Sarana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surya Toto and Adi Sarana.

Diversification Opportunities for Surya Toto and Adi Sarana

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between Surya and Adi is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Surya Toto Indonesia and Adi Sarana Armada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adi Sarana Armada and Surya Toto 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 Surya Toto Indonesia are associated (or correlated) with Adi Sarana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adi Sarana Armada has no effect on the direction of Surya Toto i.e., Surya Toto and Adi Sarana go up and down completely randomly.

Pair Corralation between Surya Toto and Adi Sarana

Assuming the 90 days trading horizon Surya Toto Indonesia is expected to generate 0.38 times more return on investment than Adi Sarana. However, Surya Toto Indonesia is 2.63 times less risky than Adi Sarana. It trades about 0.02 of its potential returns per unit of risk. Adi Sarana Armada is currently generating about -0.01 per unit of risk. If you would invest  21,161  in Surya Toto Indonesia on September 14, 2024 and sell it today you would earn a total of  1,039  from holding Surya Toto Indonesia or generate 4.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Surya Toto Indonesia  vs.  Adi Sarana Armada

 Performance 
       Timeline  
Surya Toto Indonesia 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Surya Toto Indonesia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Surya Toto is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Adi Sarana Armada 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Adi Sarana Armada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Adi Sarana is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Surya Toto and Adi Sarana Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Surya Toto and Adi Sarana

The main advantage of trading using opposite Surya Toto and Adi Sarana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surya Toto position performs unexpectedly, Adi Sarana 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 Adi Sarana will offset losses from the drop in Adi Sarana's long position.
The idea behind Surya Toto Indonesia and Adi Sarana Armada 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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