Correlation Between Indo Tambangraya and Tempo Scan

Can any of the company-specific risk be diversified away by investing in both Indo Tambangraya and Tempo Scan 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 Indo Tambangraya and Tempo Scan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indo Tambangraya Megah and Tempo Scan Pacific, you can compare the effects of market volatilities on Indo Tambangraya and Tempo Scan 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 Indo Tambangraya with a short position of Tempo Scan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Tambangraya and Tempo Scan.

Diversification Opportunities for Indo Tambangraya and Tempo Scan

-0.63

Correlation Coefficient

Indo Tambangraya  Tempo Scan

Excellent diversification

The 3 months correlation between Indo and Tempo is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Indo Tambangraya Megah and Tempo Scan Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempo Scan Pacific and Indo Tambangraya 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 Indo Tambangraya Megah are associated (or correlated) with Tempo Scan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempo Scan Pacific has no effect on the direction of Indo Tambangraya i.e., Indo Tambangraya and Tempo Scan go up and down completely randomly.

Pair Corralation between Indo Tambangraya and Tempo Scan

Assuming the 90 days trading horizon Indo Tambangraya Megah is expected to generate 0.76 times more return on investment than Tempo Scan. However, Indo Tambangraya Megah is 1.32 times less risky than Tempo Scan. It trades about 0.12 of its potential returns per unit of risk. Tempo Scan Pacific is currently generating about -0.04 per unit of risk. If you would invest  2,585,000  in Indo Tambangraya Megah on September 15, 2024 and sell it today you would earn a total of  195,000  from holding Indo Tambangraya Megah or generate 7.54% return on investment over 90 days.

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

Indo Tambangraya Megah  vs.  Tempo Scan Pacific

Indo Tambangraya Megah

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indo Tambangraya Megah are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Indo Tambangraya may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tempo Scan Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Indo Tambangraya and Tempo Scan

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

The idea behind Indo Tambangraya Megah and Tempo Scan Pacific 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.