Correlation Between Trisula Textile and Betonjaya Manunggal

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

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

Diversification Opportunities for Trisula Textile and Betonjaya Manunggal

0.7

Correlation Coefficient

Trisula Textile  Betonjaya Manunggal

Poor diversification

The 3 months correlation between Trisula and Betonjaya is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Trisula Textile Industries and Betonjaya Manunggal Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betonjaya Manunggal Tbk and Trisula Textile 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 Trisula Textile Industries are associated (or correlated) with Betonjaya Manunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betonjaya Manunggal Tbk has no effect on the direction of Trisula Textile i.e., Trisula Textile and Betonjaya Manunggal go up and down completely randomly.

Pair Corralation between Trisula Textile and Betonjaya Manunggal

Assuming the 90 days trading horizon Trisula Textile Industries is expected to generate 5.04 times more return on investment than Betonjaya Manunggal. However, Trisula Textile is 5.04 times more volatile than Betonjaya Manunggal Tbk. It trades about 0.09 of its potential returns per unit of risk. Betonjaya Manunggal Tbk is currently generating about 0.01 per unit of risk. 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

Trisula Textile Industries  vs.  Betonjaya Manunggal Tbk

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.

Betonjaya Manunggal Tbk

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Trisula Textile Industries and Betonjaya Manunggal Tbk 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.