Correlation Between Surya Permata and Bhakti Multi

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

By analyzing existing cross correlation between Surya Permata Andalan and Bhakti Multi Artha, you can compare the effects of market volatilities on Surya Permata and Bhakti Multi 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 Surya Permata with a short position of Bhakti Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surya Permata and Bhakti Multi.

Diversification Opportunities for Surya Permata and Bhakti Multi

0.84

Correlation Coefficient

Surya Permata  Bhakti Multi

Very poor diversification

The 3 months correlation between Surya and Bhakti is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Surya Permata Andalan and Bhakti Multi Artha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhakti Multi Artha and Surya Permata 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 Surya Permata Andalan are associated (or correlated) with Bhakti Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhakti Multi Artha has no effect on the direction of Surya Permata i.e., Surya Permata and Bhakti Multi go up and down completely randomly.

Pair Corralation between Surya Permata and Bhakti Multi

Assuming the 90 days trading horizon Surya Permata Andalan is expected to generate 0.78 times more return on investment than Bhakti Multi. However, Surya Permata Andalan is 1.27 times less risky than Bhakti Multi. It trades about -0.04 of its potential returns per unit of risk. Bhakti Multi Artha is currently generating about -0.05 per unit of risk. If you would invest  18,100  in Surya Permata Andalan on September 14, 2024 and sell it today you would lose (3,800) from holding Surya Permata Andalan or give up 20.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.61%
Values	Daily Returns

Surya Permata Andalan  vs.  Bhakti Multi Artha

Surya Permata Andalan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surya Permata Andalan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Surya Permata is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bhakti Multi Artha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bhakti Multi Artha 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 Surya Permata and Bhakti Multi

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

The idea behind Surya Permata Andalan and Bhakti Multi Artha 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.