Correlation Between Citra Putra and Satria Mega

Can any of the company-specific risk be diversified away by investing in both Citra Putra and Satria Mega 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 Citra Putra and Satria Mega into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citra Putra Realty and Satria Mega Kencana, you can compare the effects of market volatilities on Citra Putra and Satria Mega 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 Citra Putra with a short position of Satria Mega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citra Putra and Satria Mega.

Diversification Opportunities for Citra Putra and Satria Mega

-0.38

Correlation Coefficient

Citra Putra  Satria Mega

Very good diversification

The 3 months correlation between Citra and Satria is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Citra Putra Realty and Satria Mega Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satria Mega Kencana and Citra Putra 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 Citra Putra Realty are associated (or correlated) with Satria Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satria Mega Kencana has no effect on the direction of Citra Putra i.e., Citra Putra and Satria Mega go up and down completely randomly.

Pair Corralation between Citra Putra and Satria Mega

Assuming the 90 days trading horizon Citra Putra Realty is expected to generate 1.1 times more return on investment than Satria Mega. However, Citra Putra is 1.1 times more volatile than Satria Mega Kencana. It trades about 0.19 of its potential returns per unit of risk. Satria Mega Kencana is currently generating about 0.01 per unit of risk. If you would invest  16,600  in Citra Putra Realty on September 13, 2024 and sell it today you would earn a total of  10,000  from holding Citra Putra Realty or generate 60.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Citra Putra Realty  vs.  Satria Mega Kencana

Citra Putra Realty

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citra Putra Realty are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Citra Putra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Satria Mega Kencana

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Satria Mega Kencana are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Satria Mega is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citra Putra and Satria Mega

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

The idea behind Citra Putra Realty and Satria Mega Kencana 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.