Correlation Between Tempo Inti and Supra Boga

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

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

Diversification Opportunities for Tempo Inti and Supra Boga

0.61

Correlation Coefficient

Tempo Inti  Supra Boga

Poor diversification

The 3 months correlation between Tempo and Supra is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tempo Inti Media and Supra Boga Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supra Boga Lestari and Tempo Inti 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 Tempo Inti Media are associated (or correlated) with Supra Boga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supra Boga Lestari has no effect on the direction of Tempo Inti i.e., Tempo Inti and Supra Boga go up and down completely randomly.

Pair Corralation between Tempo Inti and Supra Boga

Assuming the 90 days trading horizon Tempo Inti Media is expected to generate 4.01 times more return on investment than Supra Boga. However, Tempo Inti is 4.01 times more volatile than Supra Boga Lestari. It trades about 0.04 of its potential returns per unit of risk. Supra Boga Lestari is currently generating about -0.08 per unit of risk. If you would invest  18,300  in Tempo Inti Media on September 17, 2024 and sell it today you would earn a total of  100.00  from holding Tempo Inti Media or generate 0.55% return on investment over 90 days.

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

Tempo Inti Media  vs.  Supra Boga Lestari

Tempo Inti Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tempo Inti Media are ranked lower than 3 (%) 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.

Supra Boga Lestari

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supra Boga Lestari 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.

Pair Trading with Tempo Inti and Supra Boga

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

The idea behind Tempo Inti Media and Supra Boga Lestari 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.