Correlation Between PT Chemstar and Trimegah Karya

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

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

Diversification Opportunities for PT Chemstar and Trimegah Karya

0.85

Correlation Coefficient

PT Chemstar  Trimegah Karya

Very poor diversification

The 3 months correlation between CHEM and Trimegah is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding PT Chemstar Indonesia 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 PT Chemstar 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 PT Chemstar Indonesia 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 PT Chemstar i.e., PT Chemstar and Trimegah Karya go up and down completely randomly.

Pair Corralation between PT Chemstar and Trimegah Karya

Assuming the 90 days trading horizon PT Chemstar Indonesia is expected to generate 2.67 times more return on investment than Trimegah Karya. However, PT Chemstar is 2.67 times more volatile than Trimegah Karya Pratama. It trades about -0.05 of its potential returns per unit of risk. Trimegah Karya Pratama is currently generating about -0.23 per unit of risk. If you would invest  7,400  in PT Chemstar Indonesia on October 26, 2024 and sell it today you would lose (1,500) from holding PT Chemstar Indonesia or give up 20.27% of portfolio value over 90 days.

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

PT Chemstar Indonesia  vs.  Trimegah Karya Pratama

PT Chemstar Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Chemstar Indonesia 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 February 2025. The latest mess may also be a sign of long-standing up-swing 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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PT Chemstar and Trimegah Karya

The main advantage of trading using opposite PT Chemstar and Trimegah Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Chemstar 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 PT Chemstar Indonesia 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.