Correlation Between Slj Global and Tirta Mahakam

Can any of the company-specific risk be diversified away by investing in both Slj Global and Tirta Mahakam 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 Slj Global and Tirta Mahakam into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Slj Global Tbk and Tirta Mahakam Resources, you can compare the effects of market volatilities on Slj Global and Tirta Mahakam 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 Slj Global with a short position of Tirta Mahakam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Slj Global and Tirta Mahakam.

Diversification Opportunities for Slj Global and Tirta Mahakam

0.39

Correlation Coefficient

Slj Global  Tirta Mahakam

Weak diversification

The 3 months correlation between Slj and Tirta is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Slj Global Tbk and Tirta Mahakam Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tirta Mahakam Resources and Slj Global 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 Slj Global Tbk are associated (or correlated) with Tirta Mahakam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tirta Mahakam Resources has no effect on the direction of Slj Global i.e., Slj Global and Tirta Mahakam go up and down completely randomly.

Pair Corralation between Slj Global and Tirta Mahakam

Assuming the 90 days trading horizon Slj Global Tbk is expected to under-perform the Tirta Mahakam. In addition to that, Slj Global is 1.0 times more volatile than Tirta Mahakam Resources. It trades about -0.01 of its total potential returns per unit of risk. Tirta Mahakam Resources is currently generating about 0.03 per unit of volatility. If you would invest  5,000  in Tirta Mahakam Resources on September 13, 2024 and sell it today you would earn a total of  1,000.00  from holding Tirta Mahakam Resources or generate 20.0% return on investment over 90 days.

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

Slj Global Tbk  vs.  Tirta Mahakam Resources

Slj Global Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Slj Global Tbk 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.

Tirta Mahakam Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tirta Mahakam Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tirta Mahakam disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Slj Global and Tirta Mahakam

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

The idea behind Slj Global Tbk and Tirta Mahakam Resources 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.