Correlation Between Tera Data and Trimegah Karya

Can any of the company-specific risk be diversified away by investing in both Tera Data and Trimegah Karya 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 Trimegah Karya 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 Trimegah Karya Pratama, you can compare the effects of market volatilities on Tera Data and Trimegah Karya 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 Trimegah Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tera Data and Trimegah Karya.

Diversification Opportunities for Tera Data and Trimegah Karya

0.53

Correlation Coefficient

Tera Data  Trimegah Karya

Very weak diversification

The 3 months correlation between Tera and Trimegah is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tera Data Indonusa and Trimegah Karya Pratama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimegah Karya Pratama 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 Trimegah Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimegah Karya Pratama has no effect on the direction of Tera Data i.e., Tera Data and Trimegah Karya go up and down completely randomly.

Pair Corralation between Tera Data and Trimegah Karya

Assuming the 90 days trading horizon Tera Data Indonusa is expected to under-perform the Trimegah Karya. But the stock apears to be less risky and, when comparing its historical volatility, Tera Data Indonusa is 1.67 times less risky than Trimegah Karya. The stock trades about -0.08 of its potential returns per unit of risk. The Trimegah Karya Pratama is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  7,500  in Trimegah Karya Pratama on September 3, 2024 and sell it today you would lose (900.00) from holding Trimegah Karya Pratama or give up 12.0% of portfolio value over 90 days.

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

Tera Data Indonusa  vs.  Trimegah Karya Pratama

Tera Data Indonusa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tera Data Indonusa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Trimegah Karya Pratama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trimegah Karya Pratama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Tera Data and Trimegah Karya

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

The idea behind Tera Data Indonusa and Trimegah Karya Pratama 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.