Correlation Between Satyamitra Kemas and Gunung Raja

Can any of the company-specific risk be diversified away by investing in both Satyamitra Kemas and Gunung Raja 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 Satyamitra Kemas and Gunung Raja into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Satyamitra Kemas Lestari and Gunung Raja Paksi, you can compare the effects of market volatilities on Satyamitra Kemas and Gunung Raja 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 Satyamitra Kemas with a short position of Gunung Raja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Satyamitra Kemas and Gunung Raja.

Diversification Opportunities for Satyamitra Kemas and Gunung Raja

-0.1

Correlation Coefficient

Satyamitra Kemas  Gunung Raja

Good diversification

The 3 months correlation between Satyamitra and Gunung is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Satyamitra Kemas Lestari and Gunung Raja Paksi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunung Raja Paksi and Satyamitra Kemas 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 Satyamitra Kemas Lestari are associated (or correlated) with Gunung Raja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunung Raja Paksi has no effect on the direction of Satyamitra Kemas i.e., Satyamitra Kemas and Gunung Raja go up and down completely randomly.

Pair Corralation between Satyamitra Kemas and Gunung Raja

Assuming the 90 days trading horizon Satyamitra Kemas Lestari is expected to under-perform the Gunung Raja. But the stock apears to be less risky and, when comparing its historical volatility, Satyamitra Kemas Lestari is 2.34 times less risky than Gunung Raja. The stock trades about -0.12 of its potential returns per unit of risk. The Gunung Raja Paksi is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  44,000  in Gunung Raja Paksi on April 7, 2024 and sell it today you would earn a total of  2,800  from holding Gunung Raja Paksi or generate 6.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

Satyamitra Kemas Lestari  vs.  Gunung Raja Paksi

Satyamitra Kemas Lestari

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Satyamitra Kemas Lestari has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Satyamitra Kemas is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Gunung Raja Paksi

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gunung Raja Paksi are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Gunung Raja disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Satyamitra Kemas and Gunung Raja

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

The idea behind Satyamitra Kemas Lestari and Gunung Raja Paksi 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.