Correlation Between Arwana Citramulia and Sawit Sumbermas
Can any of the company-specific risk be diversified away by investing in both Arwana Citramulia and Sawit Sumbermas 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 Arwana Citramulia and Sawit Sumbermas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arwana Citramulia Tbk and Sawit Sumbermas Sarana, you can compare the effects of market volatilities on Arwana Citramulia and Sawit Sumbermas 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 Arwana Citramulia with a short position of Sawit Sumbermas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arwana Citramulia and Sawit Sumbermas.
Diversification Opportunities for Arwana Citramulia and Sawit Sumbermas
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arwana and Sawit is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Arwana Citramulia Tbk and Sawit Sumbermas Sarana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sawit Sumbermas Sarana and Arwana Citramulia 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 Arwana Citramulia Tbk are associated (or correlated) with Sawit Sumbermas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sawit Sumbermas Sarana has no effect on the direction of Arwana Citramulia i.e., Arwana Citramulia and Sawit Sumbermas go up and down completely randomly.
Pair Corralation between Arwana Citramulia and Sawit Sumbermas
Assuming the 90 days trading horizon Arwana Citramulia Tbk is expected to under-perform the Sawit Sumbermas. But the stock apears to be less risky and, when comparing its historical volatility, Arwana Citramulia Tbk is 1.97 times less risky than Sawit Sumbermas. The stock trades about -0.03 of its potential returns per unit of risk. The Sawit Sumbermas Sarana is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 90,366 in Sawit Sumbermas Sarana on January 25, 2024 and sell it today you would earn a total of 11,134 from holding Sawit Sumbermas Sarana or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Arwana Citramulia Tbk vs. Sawit Sumbermas Sarana
Performance |
| Timeline |
| Arwana Citramulia Tbk |
| Sawit Sumbermas Sarana |
Arwana Citramulia and Sawit Sumbermas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arwana Citramulia and Sawit Sumbermas
The main advantage of trading using opposite Arwana Citramulia and Sawit Sumbermas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arwana Citramulia position performs unexpectedly, Sawit Sumbermas 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 Sawit Sumbermas will offset losses from the drop in Sawit Sumbermas' long position.The idea behind Arwana Citramulia Tbk and Sawit Sumbermas Sarana 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.Check out your portfolio center.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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