Correlation Between Alkindo Naratama and Trisula Textile

Can any of the company-specific risk be diversified away by investing in both Alkindo Naratama and Trisula Textile 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 Alkindo Naratama and Trisula Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alkindo Naratama Tbk and Trisula Textile Industries, you can compare the effects of market volatilities on Alkindo Naratama and Trisula Textile 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 Alkindo Naratama with a short position of Trisula Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkindo Naratama and Trisula Textile.

Diversification Opportunities for Alkindo Naratama and Trisula Textile

0.6

Correlation Coefficient

Alkindo Naratama  Trisula Textile

Poor diversification

The 3 months correlation between Alkindo and Trisula is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alkindo Naratama Tbk and Trisula Textile Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trisula Textile Indu and Alkindo Naratama 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 Alkindo Naratama Tbk are associated (or correlated) with Trisula Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trisula Textile Indu has no effect on the direction of Alkindo Naratama i.e., Alkindo Naratama and Trisula Textile go up and down completely randomly.

Pair Corralation between Alkindo Naratama and Trisula Textile

Assuming the 90 days trading horizon Alkindo Naratama Tbk is expected to under-perform the Trisula Textile. But the stock apears to be less risky and, when comparing its historical volatility, Alkindo Naratama Tbk is 2.9 times less risky than Trisula Textile. The stock trades about -0.01 of its potential returns per unit of risk. The Trisula Textile Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,900  in Trisula Textile Industries on December 5, 2024 and sell it today you would earn a total of  400.00  from holding Trisula Textile Industries or generate 8.16% return on investment over 90 days.

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

Alkindo Naratama Tbk  vs.  Trisula Textile Industries

Alkindo Naratama Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alkindo Naratama Tbk 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Trisula Textile Indu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trisula Textile Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Trisula Textile 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 Alkindo Naratama and Trisula Textile

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

The idea behind Alkindo Naratama Tbk and Trisula Textile Industries 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.