Correlation Between Trans Power and Pelayaran Nasional

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

By analyzing existing cross correlation between Trans Power Marine and Pelayaran Nasional Bina, you can compare the effects of market volatilities on Trans Power and Pelayaran Nasional 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 Trans Power with a short position of Pelayaran Nasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trans Power and Pelayaran Nasional.

Diversification Opportunities for Trans Power and Pelayaran Nasional

0.71

Correlation Coefficient

Trans Power  Pelayaran Nasional

Poor diversification

The 3 months correlation between Trans and Pelayaran is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Trans Power Marine and Pelayaran Nasional Bina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pelayaran Nasional Bina and Trans Power 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 Trans Power Marine are associated (or correlated) with Pelayaran Nasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pelayaran Nasional Bina has no effect on the direction of Trans Power i.e., Trans Power and Pelayaran Nasional go up and down completely randomly.

Pair Corralation between Trans Power and Pelayaran Nasional

Assuming the 90 days trading horizon Trans Power Marine is expected to under-perform the Pelayaran Nasional. But the stock apears to be less risky and, when comparing its historical volatility, Trans Power Marine is 1.01 times less risky than Pelayaran Nasional. The stock trades about -0.05 of its potential returns per unit of risk. The Pelayaran Nasional Bina is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  8,500  in Pelayaran Nasional Bina on September 17, 2024 and sell it today you would lose (500.00) from holding Pelayaran Nasional Bina or give up 5.88% of portfolio value over 90 days.

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

Trans Power Marine  vs.  Pelayaran Nasional Bina

Trans Power Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trans Power Marine 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.

Pelayaran Nasional Bina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pelayaran Nasional Bina has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pelayaran Nasional 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 Trans Power and Pelayaran Nasional

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

The idea behind Trans Power Marine and Pelayaran Nasional Bina 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.