Correlation Between Indosat Tbk and Sawit Sumbermas

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

By analyzing existing cross correlation between Indosat Tbk and Sawit Sumbermas Sarana, you can compare the effects of market volatilities on Indosat Tbk and Sawit Sumbermas 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 Sawit Sumbermas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosat Tbk and Sawit Sumbermas.

Diversification Opportunities for Indosat Tbk and Sawit Sumbermas

-0.11

Correlation Coefficient

Indosat Tbk  Sawit Sumbermas

Good diversification

The 3 months correlation between Indosat and Sawit is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Sawit Sumbermas Sarana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sawit Sumbermas Sarana 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 Sawit Sumbermas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sawit Sumbermas Sarana has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Sawit Sumbermas go up and down completely randomly.

Pair Corralation between Indosat Tbk and Sawit Sumbermas

Assuming the 90 days trading horizon Indosat Tbk is expected to generate 0.44 times more return on investment than Sawit Sumbermas. However, Indosat Tbk is 2.26 times less risky than Sawit Sumbermas. It trades about 0.22 of its potential returns per unit of risk. Sawit Sumbermas Sarana is currently generating about 0.0 per unit of risk. If you would invest  214,000  in Indosat Tbk on September 12, 2024 and sell it today you would earn a total of  31,000  from holding Indosat Tbk or generate 14.49% return on investment over 90 days.

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

Indosat Tbk  vs.  Sawit Sumbermas Sarana

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.

Sawit Sumbermas Sarana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sawit Sumbermas Sarana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sawit Sumbermas 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 Indosat Tbk and Sawit Sumbermas

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

The idea behind Indosat Tbk and Sawit Sumbermas Sarana 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.