Correlation Between Perusahaan Perkebunan and Summarecon Agung

Can any of the company-specific risk be diversified away by investing in both Perusahaan Perkebunan and Summarecon Agung 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 Perusahaan Perkebunan and Summarecon Agung into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perusahaan Perkebunan London and Summarecon Agung Tbk, you can compare the effects of market volatilities on Perusahaan Perkebunan and Summarecon Agung 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 Perusahaan Perkebunan with a short position of Summarecon Agung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perusahaan Perkebunan and Summarecon Agung.

Diversification Opportunities for Perusahaan Perkebunan and Summarecon Agung

-0.16

Correlation Coefficient

Perusahaan Perkebunan  Summarecon Agung

Good diversification

The 3 months correlation between Perusahaan and Summarecon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perkebunan London and Summarecon Agung Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summarecon Agung Tbk and Perusahaan Perkebunan 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 Perusahaan Perkebunan London are associated (or correlated) with Summarecon Agung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summarecon Agung Tbk has no effect on the direction of Perusahaan Perkebunan i.e., Perusahaan Perkebunan and Summarecon Agung go up and down completely randomly.

Pair Corralation between Perusahaan Perkebunan and Summarecon Agung

Assuming the 90 days trading horizon Perusahaan Perkebunan London is expected to generate 1.18 times more return on investment than Summarecon Agung. However, Perusahaan Perkebunan is 1.18 times more volatile than Summarecon Agung Tbk. It trades about 0.09 of its potential returns per unit of risk. Summarecon Agung Tbk is currently generating about -0.15 per unit of risk. If you would invest  97,000  in Perusahaan Perkebunan London on September 16, 2024 and sell it today you would earn a total of  13,000  from holding Perusahaan Perkebunan London or generate 13.4% return on investment over 90 days.

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

Perusahaan Perkebunan London  vs.  Summarecon Agung Tbk

Perusahaan Perkebunan

Risk-Adjusted Performance

6 of 100

Modest

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

Summarecon Agung Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summarecon Agung 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.

Pair Trading with Perusahaan Perkebunan and Summarecon Agung

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

The idea behind Perusahaan Perkebunan London and Summarecon Agung 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.