Correlation Between Sumber Energi and Logindo Samudramakmur

Can any of the company-specific risk be diversified away by investing in both Sumber Energi and Logindo Samudramakmur 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 Logindo Samudramakmur 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 Logindo Samudramakmur Tbk, you can compare the effects of market volatilities on Sumber Energi and Logindo Samudramakmur 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 Logindo Samudramakmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Energi and Logindo Samudramakmur.

Diversification Opportunities for Sumber Energi and Logindo Samudramakmur

-0.56

Correlation Coefficient

Sumber Energi  Logindo Samudramakmur

Excellent diversification

The 3 months correlation between Sumber and Logindo is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Energi Andalan and Logindo Samudramakmur Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logindo Samudramakmur Tbk 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 Logindo Samudramakmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logindo Samudramakmur Tbk has no effect on the direction of Sumber Energi i.e., Sumber Energi and Logindo Samudramakmur go up and down completely randomly.

Pair Corralation between Sumber Energi and Logindo Samudramakmur

Assuming the 90 days trading horizon Sumber Energi Andalan is expected to under-perform the Logindo Samudramakmur. In addition to that, Sumber Energi is 1.33 times more volatile than Logindo Samudramakmur Tbk. It trades about -0.08 of its total potential returns per unit of risk. Logindo Samudramakmur Tbk is currently generating about -0.09 per unit of volatility. If you would invest  11,900  in Logindo Samudramakmur Tbk on September 18, 2024 and sell it today you would lose (500.00) from holding Logindo Samudramakmur Tbk or give up 4.2% of portfolio value over 90 days.

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

Sumber Energi Andalan  vs.  Logindo Samudramakmur Tbk

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.

Logindo Samudramakmur Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Logindo Samudramakmur Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Logindo Samudramakmur disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sumber Energi and Logindo Samudramakmur

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

The idea behind Sumber Energi Andalan and Logindo Samudramakmur 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.