Correlation Between Tambun Indah and Alliance Financial

Can any of the company-specific risk be diversified away by investing in both Tambun Indah and Alliance Financial 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 Tambun Indah and Alliance Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tambun Indah Land and Alliance Financial Group, you can compare the effects of market volatilities on Tambun Indah and Alliance Financial 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 Tambun Indah with a short position of Alliance Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tambun Indah and Alliance Financial.

Diversification Opportunities for Tambun Indah and Alliance Financial

-0.71

Correlation Coefficient

Tambun Indah  Alliance Financial

Pay attention - limited upside

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

Pair Corralation between Tambun Indah and Alliance Financial

Assuming the 90 days trading horizon Tambun Indah is expected to generate 1.06 times less return on investment than Alliance Financial. In addition to that, Tambun Indah is 2.07 times more volatile than Alliance Financial Group. It trades about 0.04 of its total potential returns per unit of risk. Alliance Financial Group is currently generating about 0.08 per unit of volatility. If you would invest  333.00  in Alliance Financial Group on October 9, 2024 and sell it today you would earn a total of  169.00  from holding Alliance Financial Group or generate 50.75% return on investment over 90 days.

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

Tambun Indah Land  vs.  Alliance Financial Group

Tambun Indah Land

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alliance Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Financial Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Alliance Financial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tambun Indah and Alliance Financial

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

The idea behind Tambun Indah Land and Alliance Financial Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.