Correlation Between Trias Sentosa and Tirta Mahakam

Can any of the company-specific risk be diversified away by investing in both Trias Sentosa and Tirta Mahakam 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 Tirta Mahakam 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 Tirta Mahakam Resources, you can compare the effects of market volatilities on Trias Sentosa and Tirta Mahakam 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 Tirta Mahakam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trias Sentosa and Tirta Mahakam.

Diversification Opportunities for Trias Sentosa and Tirta Mahakam

0.13

Correlation Coefficient

Trias Sentosa  Tirta Mahakam

Average diversification

The 3 months correlation between Trias and Tirta is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Trias Sentosa Tbk and Tirta Mahakam Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tirta Mahakam Resources 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 Tirta Mahakam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tirta Mahakam Resources has no effect on the direction of Trias Sentosa i.e., Trias Sentosa and Tirta Mahakam go up and down completely randomly.

Pair Corralation between Trias Sentosa and Tirta Mahakam

Assuming the 90 days trading horizon Trias Sentosa is expected to generate 17.88 times less return on investment than Tirta Mahakam. But when comparing it to its historical volatility, Trias Sentosa Tbk is 4.75 times less risky than Tirta Mahakam. It trades about 0.01 of its potential returns per unit of risk. Tirta Mahakam Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,000  in Tirta Mahakam Resources on September 12, 2024 and sell it today you would earn a total of  200.00  from holding Tirta Mahakam Resources or generate 4.0% return on investment over 90 days.

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

Trias Sentosa Tbk  vs.  Tirta Mahakam Resources

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.

Tirta Mahakam Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tirta Mahakam Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tirta Mahakam disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trias Sentosa and Tirta Mahakam

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

The idea behind Trias Sentosa Tbk and Tirta Mahakam Resources 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.