Correlation Between Palma Serasih and Sumber Tani

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

By analyzing existing cross correlation between Palma Serasih PT and Sumber Tani Agung, you can compare the effects of market volatilities on Palma Serasih and Sumber Tani 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 Palma Serasih with a short position of Sumber Tani. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palma Serasih and Sumber Tani.

Diversification Opportunities for Palma Serasih and Sumber Tani

-0.11

Correlation Coefficient

Palma Serasih  Sumber Tani

Good diversification

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

Pair Corralation between Palma Serasih and Sumber Tani

Assuming the 90 days trading horizon Palma Serasih PT is expected to generate 1.52 times more return on investment than Sumber Tani. However, Palma Serasih is 1.52 times more volatile than Sumber Tani Agung. It trades about 0.2 of its potential returns per unit of risk. Sumber Tani Agung is currently generating about 0.03 per unit of risk. If you would invest  15,000  in Palma Serasih PT on September 13, 2024 and sell it today you would earn a total of  4,800  from holding Palma Serasih PT or generate 32.0% return on investment over 90 days.

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

Palma Serasih PT  vs.  Sumber Tani Agung

Palma Serasih PT

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palma Serasih PT are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Palma Serasih disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sumber Tani Agung

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sumber Tani Agung are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Sumber Tani 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 Palma Serasih and Sumber Tani

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

The idea behind Palma Serasih PT and Sumber Tani Agung 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.