Correlation Between Falmaco Nonwoven and Surya Citra

Can any of the company-specific risk be diversified away by investing in both Falmaco Nonwoven and Surya Citra 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 Falmaco Nonwoven and Surya Citra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falmaco Nonwoven Industri and Surya Citra Media, you can compare the effects of market volatilities on Falmaco Nonwoven and Surya Citra 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 Falmaco Nonwoven with a short position of Surya Citra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falmaco Nonwoven and Surya Citra.

Diversification Opportunities for Falmaco Nonwoven and Surya Citra

0.57

Correlation Coefficient

Falmaco Nonwoven  Surya Citra

Very weak diversification

The 3 months correlation between Falmaco and Surya is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Falmaco Nonwoven Industri and Surya Citra Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Citra Media and Falmaco Nonwoven 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 Falmaco Nonwoven Industri are associated (or correlated) with Surya Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Citra Media has no effect on the direction of Falmaco Nonwoven i.e., Falmaco Nonwoven and Surya Citra go up and down completely randomly.

Pair Corralation between Falmaco Nonwoven and Surya Citra

Assuming the 90 days trading horizon Falmaco Nonwoven Industri is expected to generate 1.1 times more return on investment than Surya Citra. However, Falmaco Nonwoven is 1.1 times more volatile than Surya Citra Media. It trades about 0.7 of its potential returns per unit of risk. Surya Citra Media is currently generating about 0.02 per unit of risk. If you would invest  2,200  in Falmaco Nonwoven Industri on March 11, 2024 and sell it today you would earn a total of  1,400  from holding Falmaco Nonwoven Industri or generate 63.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Falmaco Nonwoven Industri  vs.  Surya Citra Media

Falmaco Nonwoven Industri

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Falmaco Nonwoven Industri are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Falmaco Nonwoven disclosed solid returns over the last few months and may actually be approaching a breakup point.

Surya Citra Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surya Citra Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Falmaco Nonwoven and Surya Citra

The main advantage of trading using opposite Falmaco Nonwoven and Surya Citra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falmaco Nonwoven position performs unexpectedly, Surya Citra 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 Surya Citra will offset losses from the drop in Surya Citra's long position.

The idea behind Falmaco Nonwoven Industri and Surya Citra Media 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.