Correlation Between Sona Topas and Pembangunan Graha

Can any of the company-specific risk be diversified away by investing in both Sona Topas and Pembangunan Graha 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 Sona Topas and Pembangunan Graha into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sona Topas Tourism and Pembangunan Graha Lestari, you can compare the effects of market volatilities on Sona Topas and Pembangunan Graha 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 Sona Topas with a short position of Pembangunan Graha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sona Topas and Pembangunan Graha.

Diversification Opportunities for Sona Topas and Pembangunan Graha

0.67

Correlation Coefficient

Sona Topas  Pembangunan Graha

Poor diversification

The 3 months correlation between Sona and Pembangunan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sona Topas Tourism and Pembangunan Graha Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembangunan Graha Lestari and Sona Topas 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 Sona Topas Tourism are associated (or correlated) with Pembangunan Graha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembangunan Graha Lestari has no effect on the direction of Sona Topas i.e., Sona Topas and Pembangunan Graha go up and down completely randomly.

Pair Corralation between Sona Topas and Pembangunan Graha

Assuming the 90 days trading horizon Sona Topas Tourism is expected to generate 8.22 times more return on investment than Pembangunan Graha. However, Sona Topas is 8.22 times more volatile than Pembangunan Graha Lestari. It trades about 0.05 of its potential returns per unit of risk. Pembangunan Graha Lestari is currently generating about -0.01 per unit of risk. If you would invest  220,000  in Sona Topas Tourism on September 14, 2024 and sell it today you would earn a total of  415,000  from holding Sona Topas Tourism or generate 188.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Sona Topas Tourism  vs.  Pembangunan Graha Lestari

Sona Topas Tourism

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sona Topas Tourism are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sona Topas disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pembangunan Graha Lestari

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pembangunan Graha Lestari are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pembangunan Graha may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sona Topas and Pembangunan Graha

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

The idea behind Sona Topas Tourism and Pembangunan Graha Lestari 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 Transaction History module to view history of all your transactions and understand their impact on performance.