Correlation Between Asiaplast Industries and Sentul City

Can any of the company-specific risk be diversified away by investing in both Asiaplast Industries and Sentul City 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 Asiaplast Industries and Sentul City into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asiaplast Industries Tbk and Sentul City Tbk, you can compare the effects of market volatilities on Asiaplast Industries and Sentul City 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 Asiaplast Industries with a short position of Sentul City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiaplast Industries and Sentul City.

Diversification Opportunities for Asiaplast Industries and Sentul City

-0.52

Correlation Coefficient

Asiaplast Industries  Sentul City

Excellent diversification

The 3 months correlation between Asiaplast and Sentul is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Asiaplast Industries Tbk and Sentul City Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentul City Tbk and Asiaplast Industries 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 Asiaplast Industries Tbk are associated (or correlated) with Sentul City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentul City Tbk has no effect on the direction of Asiaplast Industries i.e., Asiaplast Industries and Sentul City go up and down completely randomly.

Pair Corralation between Asiaplast Industries and Sentul City

Assuming the 90 days trading horizon Asiaplast Industries Tbk is expected to generate 0.46 times more return on investment than Sentul City. However, Asiaplast Industries Tbk is 2.19 times less risky than Sentul City. It trades about 0.04 of its potential returns per unit of risk. Sentul City Tbk is currently generating about -0.14 per unit of risk. If you would invest  59,441  in Asiaplast Industries Tbk on April 2, 2024 and sell it today you would earn a total of  559.00  from holding Asiaplast Industries Tbk or generate 0.94% return on investment over 90 days.

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

Asiaplast Industries Tbk  vs.  Sentul City Tbk

Asiaplast Industries Tbk

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asiaplast Industries Tbk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asiaplast Industries may actually be approaching a critical reversion point that can send shares even higher in August 2024.

Sentul City Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentul City Tbk 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 August 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Asiaplast Industries and Sentul City

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

The idea behind Asiaplast Industries Tbk and Sentul City Tbk 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.