Correlation Between Indosat Tbk and Surya Citra

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

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

Diversification Opportunities for Indosat Tbk and Surya Citra

-0.5

Correlation Coefficient

Indosat Tbk  Surya Citra

Very good diversification

The 3 months correlation between Indosat and Surya is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Surya Citra Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Citra Media and Indosat Tbk 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 Indosat Tbk are associated (or correlated) with Surya Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Citra Media has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Surya Citra go up and down completely randomly.

Pair Corralation between Indosat Tbk and Surya Citra

Assuming the 90 days trading horizon Indosat Tbk is expected to under-perform the Surya Citra. In addition to that, Indosat Tbk is 2.88 times more volatile than Surya Citra Media. It trades about -0.13 of its total potential returns per unit of risk. Surya Citra Media is currently generating about 0.2 per unit of volatility. If you would invest  11,620  in Surya Citra Media on September 13, 2024 and sell it today you would earn a total of  5,680  from holding Surya Citra Media or generate 48.88% return on investment over 90 days.

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

Indosat Tbk  vs.  Surya Citra Media

Indosat Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indosat 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Surya Citra Media

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Indosat Tbk and Surya Citra

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

The idea behind Indosat Tbk and Surya Citra Media 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.