Correlation Between PT Sreeya and Pabrik Kertas

Can any of the company-specific risk be diversified away by investing in both PT Sreeya and Pabrik Kertas 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 PT Sreeya and Pabrik Kertas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Sreeya Sewu and Pabrik Kertas Tjiwi, you can compare the effects of market volatilities on PT Sreeya and Pabrik Kertas 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 PT Sreeya with a short position of Pabrik Kertas. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Sreeya and Pabrik Kertas.

Diversification Opportunities for PT Sreeya and Pabrik Kertas

-0.42

Correlation Coefficient

PT Sreeya  Pabrik Kertas

Very good diversification

The 3 months correlation between SIPD and Pabrik is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding PT Sreeya Sewu and Pabrik Kertas Tjiwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pabrik Kertas Tjiwi and PT Sreeya 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 PT Sreeya Sewu are associated (or correlated) with Pabrik Kertas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pabrik Kertas Tjiwi has no effect on the direction of PT Sreeya i.e., PT Sreeya and Pabrik Kertas go up and down completely randomly.

Pair Corralation between PT Sreeya and Pabrik Kertas

Assuming the 90 days trading horizon PT Sreeya is expected to generate 4.95 times less return on investment than Pabrik Kertas. In addition to that, PT Sreeya is 1.67 times more volatile than Pabrik Kertas Tjiwi. It trades about 0.03 of its total potential returns per unit of risk. Pabrik Kertas Tjiwi is currently generating about 0.27 per unit of volatility. If you would invest  632,500  in Pabrik Kertas Tjiwi on February 26, 2024 and sell it today you would earn a total of  250,000  from holding Pabrik Kertas Tjiwi or generate 39.53% return on investment over 90 days.

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

PT Sreeya Sewu  vs.  Pabrik Kertas Tjiwi

PT Sreeya Sewu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Sreeya Sewu are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PT Sreeya may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pabrik Kertas Tjiwi

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pabrik Kertas Tjiwi are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Pabrik Kertas disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Sreeya and Pabrik Kertas

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

The idea behind PT Sreeya Sewu and Pabrik Kertas Tjiwi 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.