Correlation Between Pyridam Farma and Siantar Top

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Can any of the company-specific risk be diversified away by investing in both Pyridam Farma and Siantar Top 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 Pyridam Farma and Siantar Top into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pyridam Farma Tbk and Siantar Top Tbk, you can compare the effects of market volatilities on Pyridam Farma and Siantar Top 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 Pyridam Farma with a short position of Siantar Top. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyridam Farma and Siantar Top.

Diversification Opportunities for Pyridam Farma and Siantar Top

PyridamSiantarDiversified AwayPyridamSiantarDiversified Away100%
-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Pyridam and Siantar is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pyridam Farma Tbk and Siantar Top Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siantar Top Tbk and Pyridam Farma 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 Pyridam Farma Tbk are associated (or correlated) with Siantar Top. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siantar Top Tbk has no effect on the direction of Pyridam Farma i.e., Pyridam Farma and Siantar Top go up and down completely randomly.

Pair Corralation between Pyridam Farma and Siantar Top

Assuming the 90 days trading horizon Pyridam Farma Tbk is expected to generate 3.81 times more return on investment than Siantar Top. However, Pyridam Farma is 3.81 times more volatile than Siantar Top Tbk. It trades about 0.13 of its potential returns per unit of risk. Siantar Top Tbk is currently generating about -0.16 per unit of risk. If you would invest  15,900  in Pyridam Farma Tbk on September 17, 2024 and sell it today you would earn a total of  7,700  from holding Pyridam Farma Tbk or generate 48.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pyridam Farma Tbk  vs.  Siantar Top Tbk

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 050100
JavaScript chart by amCharts 3.21.15PYFA STTP
       Timeline  
Pyridam Farma Tbk 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pyridam Farma Tbk are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pyridam Farma disclosed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec150200250300
Siantar Top Tbk 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Siantar Top 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec12,50013,00013,50014,00014,500

Pyridam Farma and Siantar Top Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-19.15-14.34-9.54-4.730.05.1310.3415.5520.76 0.010.020.030.040.05
JavaScript chart by amCharts 3.21.15PYFA STTP
       Returns  

Pair Trading with Pyridam Farma and Siantar Top

The main advantage of trading using opposite Pyridam Farma and Siantar Top positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyridam Farma position performs unexpectedly, Siantar Top 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 Siantar Top will offset losses from the drop in Siantar Top's long position.
The idea behind Pyridam Farma Tbk and Siantar Top 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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