Correlation Between Austindo Nusantara and Sekar Laut

Can any of the company-specific risk be diversified away by investing in both Austindo Nusantara and Sekar Laut 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 Austindo Nusantara and Sekar Laut into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Austindo Nusantara Jaya and Sekar Laut Tbk, you can compare the effects of market volatilities on Austindo Nusantara and Sekar Laut 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 Austindo Nusantara with a short position of Sekar Laut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austindo Nusantara and Sekar Laut.

Diversification Opportunities for Austindo Nusantara and Sekar Laut

0.45

Correlation Coefficient

Austindo Nusantara  Sekar Laut

Very weak diversification

The 3 months correlation between Austindo and Sekar is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Austindo Nusantara Jaya and Sekar Laut Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekar Laut Tbk and Austindo Nusantara 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 Austindo Nusantara Jaya are associated (or correlated) with Sekar Laut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekar Laut Tbk has no effect on the direction of Austindo Nusantara i.e., Austindo Nusantara and Sekar Laut go up and down completely randomly.

Pair Corralation between Austindo Nusantara and Sekar Laut

Assuming the 90 days trading horizon Austindo Nusantara is expected to generate 43.55 times less return on investment than Sekar Laut. But when comparing it to its historical volatility, Austindo Nusantara Jaya is 25.8 times less risky than Sekar Laut. It trades about 0.03 of its potential returns per unit of risk. Sekar Laut Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  18,556  in Sekar Laut Tbk on September 18, 2024 and sell it today you would earn a total of  1,044  from holding Sekar Laut Tbk or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.58%
Values	Daily Returns

Austindo Nusantara Jaya  vs.  Sekar Laut Tbk

Austindo Nusantara Jaya

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Austindo Nusantara Jaya are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Austindo Nusantara is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sekar Laut Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sekar Laut Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sekar Laut disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Austindo Nusantara and Sekar Laut

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

The idea behind Austindo Nusantara Jaya and Sekar Laut 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.