Correlation Between Satria Mega and Diamond Citra

Can any of the company-specific risk be diversified away by investing in both Satria Mega and Diamond Citra 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 Satria Mega and Diamond Citra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Satria Mega Kencana and Diamond Citra Propertindo, you can compare the effects of market volatilities on Satria Mega and Diamond Citra 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 Satria Mega with a short position of Diamond Citra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Satria Mega and Diamond Citra.

Diversification Opportunities for Satria Mega and Diamond Citra

-0.33

Correlation Coefficient

Satria Mega  Diamond Citra

Very good diversification

The 3 months correlation between Satria and Diamond is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Satria Mega Kencana and Diamond Citra Propertindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Citra Propertindo and Satria Mega 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 Satria Mega Kencana are associated (or correlated) with Diamond Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Citra Propertindo has no effect on the direction of Satria Mega i.e., Satria Mega and Diamond Citra go up and down completely randomly.

Pair Corralation between Satria Mega and Diamond Citra

Assuming the 90 days trading horizon Satria Mega is expected to generate 9.96 times less return on investment than Diamond Citra. But when comparing it to its historical volatility, Satria Mega Kencana is 1.97 times less risky than Diamond Citra. It trades about 0.01 of its potential returns per unit of risk. Diamond Citra Propertindo is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Diamond Citra Propertindo on September 14, 2024 and sell it today you would earn a total of  100.00  from holding Diamond Citra Propertindo or generate 12.5% return on investment over 90 days.

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

Satria Mega Kencana  vs.  Diamond Citra Propertindo

Satria Mega Kencana

Risk-Adjusted Performance

0 of 100

Very Weak

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

Diamond Citra Propertindo

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Citra Propertindo are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Diamond Citra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Satria Mega and Diamond Citra

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

The idea behind Satria Mega Kencana and Diamond Citra Propertindo 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.