Correlation Between Tera Data and PT Cerestar

Can any of the company-specific risk be diversified away by investing in both Tera Data and PT Cerestar 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 Tera Data and PT Cerestar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tera Data Indonusa and PT Cerestar Indonesia, you can compare the effects of market volatilities on Tera Data and PT Cerestar 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 Tera Data with a short position of PT Cerestar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tera Data and PT Cerestar.

Diversification Opportunities for Tera Data and PT Cerestar

0.03

Correlation Coefficient

Tera Data  PT Cerestar

Significant diversification

The 3 months correlation between Tera and TRGU is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tera Data Indonusa and PT Cerestar Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Cerestar Indonesia and Tera Data 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 Tera Data Indonusa are associated (or correlated) with PT Cerestar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Cerestar Indonesia has no effect on the direction of Tera Data i.e., Tera Data and PT Cerestar go up and down completely randomly.

Pair Corralation between Tera Data and PT Cerestar

Assuming the 90 days trading horizon Tera Data Indonusa is expected to under-perform the PT Cerestar. But the stock apears to be less risky and, when comparing its historical volatility, Tera Data Indonusa is 1.64 times less risky than PT Cerestar. The stock trades about -0.06 of its potential returns per unit of risk. The PT Cerestar Indonesia is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  20,400  in PT Cerestar Indonesia on September 14, 2024 and sell it today you would earn a total of  0.00  from holding PT Cerestar Indonesia or generate 0.0% return on investment over 90 days.

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

Tera Data Indonusa  vs.  PT Cerestar Indonesia

Tera Data Indonusa

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tera Data Indonusa are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tera Data disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Cerestar Indonesia

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Cerestar Indonesia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, PT Cerestar 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 Tera Data and PT Cerestar

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

The idea behind Tera Data Indonusa and PT Cerestar Indonesia 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.