Correlation Between Panorama Sentrawisata and Tempo Inti

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

By analyzing existing cross correlation between Panorama Sentrawisata Tbk and Tempo Inti Media, you can compare the effects of market volatilities on Panorama Sentrawisata and Tempo Inti 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 Panorama Sentrawisata with a short position of Tempo Inti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panorama Sentrawisata and Tempo Inti.

Diversification Opportunities for Panorama Sentrawisata and Tempo Inti

-0.5

Correlation Coefficient

Panorama Sentrawisata  Tempo Inti

Very good diversification

The 3 months correlation between Panorama and Tempo is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Panorama Sentrawisata Tbk and Tempo Inti Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempo Inti Media and Panorama Sentrawisata 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 Panorama Sentrawisata Tbk are associated (or correlated) with Tempo Inti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempo Inti Media has no effect on the direction of Panorama Sentrawisata i.e., Panorama Sentrawisata and Tempo Inti go up and down completely randomly.

Pair Corralation between Panorama Sentrawisata and Tempo Inti

Assuming the 90 days trading horizon Panorama Sentrawisata is expected to generate 2.19 times less return on investment than Tempo Inti. But when comparing it to its historical volatility, Panorama Sentrawisata Tbk is 8.23 times less risky than Tempo Inti. It trades about 0.29 of its potential returns per unit of risk. Tempo Inti Media is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  16,700  in Tempo Inti Media on September 13, 2024 and sell it today you would earn a total of  3,700  from holding Tempo Inti Media or generate 22.16% return on investment over 90 days.

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

Panorama Sentrawisata Tbk  vs.  Tempo Inti Media

Panorama Sentrawisata Tbk

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Panorama Sentrawisata Tbk are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Panorama Sentrawisata disclosed solid returns over the last few months and may actually be approaching a breakup point.

Tempo Inti Media

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tempo Inti Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tempo Inti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Panorama Sentrawisata and Tempo Inti

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

The idea behind Panorama Sentrawisata Tbk and Tempo Inti Media 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.