Correlation Between Tower Bersama and PT Sarana
Can any of the company-specific risk be diversified away by investing in both Tower Bersama and PT Sarana 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 Tower Bersama and PT Sarana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Bersama Infrastructure and PT Sarana Menara, you can compare the effects of market volatilities on Tower Bersama and PT Sarana 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 Tower Bersama with a short position of PT Sarana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Bersama and PT Sarana.
Diversification Opportunities for Tower Bersama and PT Sarana
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tower and TOWR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tower Bersama Infrastructure and PT Sarana Menara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sarana Menara and Tower Bersama 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 Tower Bersama Infrastructure are associated (or correlated) with PT Sarana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sarana Menara has no effect on the direction of Tower Bersama i.e., Tower Bersama and PT Sarana go up and down completely randomly.
Pair Corralation between Tower Bersama and PT Sarana
Assuming the 90 days trading horizon Tower Bersama Infrastructure is expected to under-perform the PT Sarana. But the stock apears to be less risky and, when comparing its historical volatility, Tower Bersama Infrastructure is 1.01 times less risky than PT Sarana. The stock trades about -0.38 of its potential returns per unit of risk. The PT Sarana Menara is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest 85,000 in PT Sarana Menara on January 20, 2024 and sell it today you would lose (5,000) from holding PT Sarana Menara or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 93.75% |
| Values | Daily Returns |
Tower Bersama Infrastructure vs. PT Sarana Menara
Performance |
| Timeline |
| Tower Bersama Infras |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| PT Sarana Menara |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tower Bersama and PT Sarana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tower Bersama and PT Sarana
The main advantage of trading using opposite Tower Bersama and PT Sarana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Bersama position performs unexpectedly, PT Sarana 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 PT Sarana will offset losses from the drop in PT Sarana's long position.The idea behind Tower Bersama Infrastructure and PT Sarana Menara 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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