Correlation Between Trimegah Securities and Sinar Mas

Can any of the company-specific risk be diversified away by investing in both Trimegah Securities and Sinar Mas 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 Trimegah Securities and Sinar Mas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trimegah Securities Tbk and Sinar Mas Multiartha, you can compare the effects of market volatilities on Trimegah Securities and Sinar Mas 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 Trimegah Securities with a short position of Sinar Mas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trimegah Securities and Sinar Mas.

Diversification Opportunities for Trimegah Securities and Sinar Mas

-0.23

Correlation Coefficient

Trimegah Securities  Sinar Mas

Very good diversification

The 3 months correlation between Trimegah and Sinar is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Trimegah Securities Tbk and Sinar Mas Multiartha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinar Mas Multiartha and Trimegah Securities 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 Trimegah Securities Tbk are associated (or correlated) with Sinar Mas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinar Mas Multiartha has no effect on the direction of Trimegah Securities i.e., Trimegah Securities and Sinar Mas go up and down completely randomly.

Pair Corralation between Trimegah Securities and Sinar Mas

Assuming the 90 days trading horizon Trimegah Securities Tbk is expected to generate 4.74 times more return on investment than Sinar Mas. However, Trimegah Securities is 4.74 times more volatile than Sinar Mas Multiartha. It trades about 0.21 of its potential returns per unit of risk. Sinar Mas Multiartha is currently generating about -0.01 per unit of risk. If you would invest  28,000  in Trimegah Securities Tbk on September 14, 2024 and sell it today you would earn a total of  9,600  from holding Trimegah Securities Tbk or generate 34.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Trimegah Securities Tbk  vs.  Sinar Mas Multiartha

Trimegah Securities Tbk

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trimegah Securities Tbk are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Trimegah Securities disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sinar Mas Multiartha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinar Mas Multiartha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sinar Mas 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 Trimegah Securities and Sinar Mas

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

The idea behind Trimegah Securities Tbk and Sinar Mas Multiartha 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.