Correlation Between Supreme Cable and Andalan Sakti

Can any of the company-specific risk be diversified away by investing in both Supreme Cable and Andalan Sakti 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 Supreme Cable and Andalan Sakti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Supreme Cable Manufacturing and Andalan Sakti PrimaindoPT, you can compare the effects of market volatilities on Supreme Cable and Andalan Sakti 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 Supreme Cable with a short position of Andalan Sakti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supreme Cable and Andalan Sakti.

Diversification Opportunities for Supreme Cable and Andalan Sakti

-0.49

Correlation Coefficient

Supreme Cable  Andalan Sakti

Very good diversification

The 3 months correlation between Supreme and Andalan is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Supreme Cable Manufacturing and Andalan Sakti PrimaindoPT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andalan Sakti PrimaindoPT and Supreme Cable 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 Supreme Cable Manufacturing are associated (or correlated) with Andalan Sakti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andalan Sakti PrimaindoPT has no effect on the direction of Supreme Cable i.e., Supreme Cable and Andalan Sakti go up and down completely randomly.

Pair Corralation between Supreme Cable and Andalan Sakti

Assuming the 90 days trading horizon Supreme Cable is expected to generate 6.74 times less return on investment than Andalan Sakti. But when comparing it to its historical volatility, Supreme Cable Manufacturing is 1.09 times less risky than Andalan Sakti. It trades about 0.04 of its potential returns per unit of risk. Andalan Sakti PrimaindoPT is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  14,500  in Andalan Sakti PrimaindoPT on March 4, 2024 and sell it today you would earn a total of  5,700  from holding Andalan Sakti PrimaindoPT or generate 39.31% return on investment over 90 days.

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

Supreme Cable Manufacturing  vs.  Andalan Sakti PrimaindoPT

Supreme Cable Manufa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supreme Cable Manufacturing 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 basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Andalan Sakti PrimaindoPT

Risk-Adjusted Performance

17 of 100

Solid

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

Pair Trading with Supreme Cable and Andalan Sakti

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

The idea behind Supreme Cable Manufacturing and Andalan Sakti PrimaindoPT 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.