Correlation Between Asuransi Harta and Tirta Mahakam

Can any of the company-specific risk be diversified away by investing in both Asuransi Harta 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 Asuransi Harta and Tirta Mahakam into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asuransi Harta Aman and Tirta Mahakam Resources, you can compare the effects of market volatilities on Asuransi Harta 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 Asuransi Harta with a short position of Tirta Mahakam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asuransi Harta and Tirta Mahakam.

Diversification Opportunities for Asuransi Harta and Tirta Mahakam

0.66

Correlation Coefficient

Asuransi Harta  Tirta Mahakam

Poor diversification

The 3 months correlation between Asuransi and Tirta is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Asuransi Harta Aman 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 Asuransi Harta 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 Asuransi Harta Aman 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 Asuransi Harta i.e., Asuransi Harta and Tirta Mahakam go up and down completely randomly.

Pair Corralation between Asuransi Harta and Tirta Mahakam

Assuming the 90 days trading horizon Asuransi Harta Aman is expected to generate 0.27 times more return on investment than Tirta Mahakam. However, Asuransi Harta Aman is 3.77 times less risky than Tirta Mahakam. It trades about -0.24 of its potential returns per unit of risk. Tirta Mahakam Resources is currently generating about -0.12 per unit of risk. If you would invest  12,500  in Asuransi Harta Aman on September 6, 2024 and sell it today you would lose (3,100) from holding Asuransi Harta Aman or give up 24.8% of portfolio value over 90 days.

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

Asuransi Harta Aman  vs.  Tirta Mahakam Resources

Asuransi Harta Aman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asuransi Harta Aman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tirta Mahakam Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tirta Mahakam Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Asuransi Harta and Tirta Mahakam

The main advantage of trading using opposite Asuransi Harta and Tirta Mahakam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asuransi Harta 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 Asuransi Harta Aman 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..