Correlation Between PT Temas and Samudera Indonesia

Can any of the company-specific risk be diversified away by investing in both PT Temas and Samudera Indonesia 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 Samudera Indonesia 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 Samudera Indonesia Tbk, you can compare the effects of market volatilities on PT Temas and Samudera Indonesia 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 Samudera Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Temas and Samudera Indonesia.

Diversification Opportunities for PT Temas and Samudera Indonesia

0.92

Correlation Coefficient

PT Temas  Samudera Indonesia

Almost no diversification

The 3 months correlation between TMAS and Samudera is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding PT Temas Tbk and Samudera Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samudera Indonesia Tbk 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 Samudera Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samudera Indonesia Tbk has no effect on the direction of PT Temas i.e., PT Temas and Samudera Indonesia go up and down completely randomly.

Pair Corralation between PT Temas and Samudera Indonesia

Assuming the 90 days trading horizon PT Temas Tbk is expected to generate 0.76 times more return on investment than Samudera Indonesia. However, PT Temas Tbk is 1.32 times less risky than Samudera Indonesia. It trades about -0.09 of its potential returns per unit of risk. Samudera Indonesia Tbk is currently generating about -0.24 per unit of risk. If you would invest  15,100  in PT Temas Tbk on September 1, 2024 and sell it today you would lose (1,100) from holding PT Temas Tbk or give up 7.28% of portfolio value over 90 days.

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

PT Temas Tbk  vs.  Samudera Indonesia Tbk

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.

Samudera Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samudera Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PT Temas and Samudera Indonesia

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

The idea behind PT Temas Tbk and Samudera Indonesia Tbk 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.