Correlation Between Tifico Fiber and Supreme Cable

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

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

Diversification Opportunities for Tifico Fiber and Supreme Cable

0.0

Correlation Coefficient

Tifico Fiber  Supreme Cable

Pay attention - limited upside

The 3 months correlation between Tifico and Supreme is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tifico Fiber Indonesia and Supreme Cable Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supreme Cable Manufa and Tifico Fiber 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 Tifico Fiber Indonesia are associated (or correlated) with Supreme Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supreme Cable Manufa has no effect on the direction of Tifico Fiber i.e., Tifico Fiber and Supreme Cable go up and down completely randomly.

Pair Corralation between Tifico Fiber and Supreme Cable

Assuming the 90 days trading horizon Tifico Fiber Indonesia is expected to under-perform the Supreme Cable. But the stock apears to be less risky and, when comparing its historical volatility, Tifico Fiber Indonesia is 44.44 times less risky than Supreme Cable. The stock trades about 0.0 of its potential returns per unit of risk. The Supreme Cable Manufacturing is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  846,710  in Supreme Cable Manufacturing on September 13, 2024 and sell it today you would lose (628,710) from holding Supreme Cable Manufacturing or give up 74.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tifico Fiber Indonesia  vs.  Supreme Cable Manufacturing

Tifico Fiber Indonesia

Risk-Adjusted Performance

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Very Weak

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

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 quite persistent forward-looking signals, Supreme Cable 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 Tifico Fiber and Supreme Cable

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

The idea behind Tifico Fiber Indonesia and Supreme Cable Manufacturing 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.