Correlation Between Batavia Prosperindo and PT Trimuda

Can any of the company-specific risk be diversified away by investing in both Batavia Prosperindo and PT Trimuda 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 Batavia Prosperindo and PT Trimuda into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Batavia Prosperindo Trans and PT Trimuda Nuansa, you can compare the effects of market volatilities on Batavia Prosperindo and PT Trimuda 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 Batavia Prosperindo with a short position of PT Trimuda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Batavia Prosperindo and PT Trimuda.

Diversification Opportunities for Batavia Prosperindo and PT Trimuda

0.8

Correlation Coefficient

Batavia Prosperindo  PT Trimuda

Very poor diversification

The 3 months correlation between Batavia and TNCA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Batavia Prosperindo Trans and PT Trimuda Nuansa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Trimuda Nuansa and Batavia Prosperindo 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 Batavia Prosperindo Trans are associated (or correlated) with PT Trimuda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Trimuda Nuansa has no effect on the direction of Batavia Prosperindo i.e., Batavia Prosperindo and PT Trimuda go up and down completely randomly.

Pair Corralation between Batavia Prosperindo and PT Trimuda

Assuming the 90 days trading horizon Batavia Prosperindo Trans is expected to generate 0.19 times more return on investment than PT Trimuda. However, Batavia Prosperindo Trans is 5.13 times less risky than PT Trimuda. It trades about -0.11 of its potential returns per unit of risk. PT Trimuda Nuansa is currently generating about -0.08 per unit of risk. If you would invest  9,800  in Batavia Prosperindo Trans on September 16, 2024 and sell it today you would lose (1,100) from holding Batavia Prosperindo Trans or give up 11.22% of portfolio value over 90 days.

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

Batavia Prosperindo Trans  vs.  PT Trimuda Nuansa

Batavia Prosperindo Trans

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batavia Prosperindo Trans has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

PT Trimuda Nuansa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Trimuda Nuansa 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Batavia Prosperindo and PT Trimuda

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

The idea behind Batavia Prosperindo Trans and PT Trimuda Nuansa 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.