Correlation Between Sumber Energi and Anugerah Kagum

Can any of the company-specific risk be diversified away by investing in both Sumber Energi and Anugerah Kagum 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 Sumber Energi and Anugerah Kagum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sumber Energi Andalan and Anugerah Kagum Karya, you can compare the effects of market volatilities on Sumber Energi and Anugerah Kagum 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 Sumber Energi with a short position of Anugerah Kagum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Energi and Anugerah Kagum.

Diversification Opportunities for Sumber Energi and Anugerah Kagum

-0.7

Correlation Coefficient

Sumber Energi  Anugerah Kagum

Excellent diversification

The 3 months correlation between Sumber and Anugerah is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Energi Andalan and Anugerah Kagum Karya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anugerah Kagum Karya and Sumber Energi 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 Sumber Energi Andalan are associated (or correlated) with Anugerah Kagum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anugerah Kagum Karya has no effect on the direction of Sumber Energi i.e., Sumber Energi and Anugerah Kagum go up and down completely randomly.

Pair Corralation between Sumber Energi and Anugerah Kagum

Assuming the 90 days trading horizon Sumber Energi Andalan is expected to generate 1.3 times more return on investment than Anugerah Kagum. However, Sumber Energi is 1.3 times more volatile than Anugerah Kagum Karya. It trades about -0.2 of its potential returns per unit of risk. Anugerah Kagum Karya is currently generating about -3.05 per unit of risk. If you would invest  94,000  in Sumber Energi Andalan on February 1, 2024 and sell it today you would lose (9,500) from holding Sumber Energi Andalan or give up 10.11% of portfolio value over 90 days.

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

Sumber Energi Andalan  vs.  Anugerah Kagum Karya

Sumber Energi Andalan

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sumber Energi Andalan are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sumber Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Anugerah Kagum Karya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anugerah Kagum Karya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Sumber Energi and Anugerah Kagum

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

The idea behind Sumber Energi Andalan and Anugerah Kagum Karya 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.