Correlation Between Trias Sentosa and Aneka Tambang

Can any of the company-specific risk be diversified away by investing in both Trias Sentosa and Aneka Tambang 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 Trias Sentosa and Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trias Sentosa Tbk and Aneka Tambang Persero, you can compare the effects of market volatilities on Trias Sentosa and Aneka Tambang 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 Trias Sentosa with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trias Sentosa and Aneka Tambang.

Diversification Opportunities for Trias Sentosa and Aneka Tambang

-0.39

Correlation Coefficient

Trias Sentosa  Aneka Tambang

Very good diversification

The 3 months correlation between Trias and Aneka is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Trias Sentosa Tbk and Aneka Tambang Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Persero and Trias Sentosa 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 Trias Sentosa Tbk are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Persero has no effect on the direction of Trias Sentosa i.e., Trias Sentosa and Aneka Tambang go up and down completely randomly.

Pair Corralation between Trias Sentosa and Aneka Tambang

Assuming the 90 days trading horizon Trias Sentosa Tbk is expected to under-perform the Aneka Tambang. But the stock apears to be less risky and, when comparing its historical volatility, Trias Sentosa Tbk is 1.74 times less risky than Aneka Tambang. The stock trades about -0.01 of its potential returns per unit of risk. The Aneka Tambang Persero is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  142,500  in Aneka Tambang Persero on September 26, 2024 and sell it today you would earn a total of  1,000.00  from holding Aneka Tambang Persero or generate 0.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Trias Sentosa Tbk  vs.  Aneka Tambang Persero

Trias Sentosa Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trias Sentosa Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Trias Sentosa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Aneka Tambang Persero

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aneka Tambang Persero are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Aneka Tambang 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 Trias Sentosa and Aneka Tambang

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

The idea behind Trias Sentosa Tbk and Aneka Tambang Persero 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.