Correlation Between Sumber Energi and Indah Prakasa

Can any of the company-specific risk be diversified away by investing in both Sumber Energi and Indah Prakasa 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 Sumber Energi and Indah Prakasa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sumber Energi Andalan and Indah Prakasa Sentosa, you can compare the effects of market volatilities on Sumber Energi and Indah Prakasa 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 Sumber Energi with a short position of Indah Prakasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Energi and Indah Prakasa.

Diversification Opportunities for Sumber Energi and Indah Prakasa

-0.59

Correlation Coefficient

Sumber Energi  Indah Prakasa

Excellent diversification

The 3 months correlation between Sumber and Indah is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Energi Andalan and Indah Prakasa Sentosa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indah Prakasa Sentosa and Sumber Energi 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 Sumber Energi Andalan are associated (or correlated) with Indah Prakasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indah Prakasa Sentosa has no effect on the direction of Sumber Energi i.e., Sumber Energi and Indah Prakasa go up and down completely randomly.

Pair Corralation between Sumber Energi and Indah Prakasa

Assuming the 90 days trading horizon Sumber Energi Andalan is expected to under-perform the Indah Prakasa. But the stock apears to be less risky and, when comparing its historical volatility, Sumber Energi Andalan is 1.19 times less risky than Indah Prakasa. The stock trades about 0.0 of its potential returns per unit of risk. The Indah Prakasa Sentosa is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  12,200  in Indah Prakasa Sentosa on September 15, 2024 and sell it today you would earn a total of  4,000  from holding Indah Prakasa Sentosa or generate 32.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Sumber Energi Andalan  vs.  Indah Prakasa Sentosa

Sumber Energi Andalan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumber Energi Andalan 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.

Indah Prakasa Sentosa

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indah Prakasa Sentosa are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Indah Prakasa disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sumber Energi and Indah Prakasa

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

The idea behind Sumber Energi Andalan and Indah Prakasa Sentosa 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.