Correlation Between PT Temas and Habco Trans

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

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

Diversification Opportunities for PT Temas and Habco Trans

-0.54

Correlation Coefficient

PT Temas  Habco Trans

Excellent diversification

The 3 months correlation between TMAS and Habco is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding PT Temas Tbk and Habco Trans Maritima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Habco Trans Maritima and PT Temas 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 PT Temas Tbk are associated (or correlated) with Habco Trans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Habco Trans Maritima has no effect on the direction of PT Temas i.e., PT Temas and Habco Trans go up and down completely randomly.

Pair Corralation between PT Temas and Habco Trans

Assuming the 90 days trading horizon PT Temas Tbk is expected to under-perform the Habco Trans. But the stock apears to be less risky and, when comparing its historical volatility, PT Temas Tbk is 2.15 times less risky than Habco Trans. The stock trades about -0.1 of its potential returns per unit of risk. The Habco Trans Maritima is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  26,800  in Habco Trans Maritima on September 12, 2024 and sell it today you would earn a total of  1,200  from holding Habco Trans Maritima or generate 4.48% return on investment over 90 days.

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

PT Temas Tbk  vs.  Habco Trans Maritima

PT Temas Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Temas 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.

Habco Trans Maritima

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Habco Trans Maritima are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Habco Trans may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Temas and Habco Trans

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

The idea behind PT Temas Tbk and Habco Trans Maritima 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.