Correlation Between Chitose Internasional and Tempo Inti

Can any of the company-specific risk be diversified away by investing in both Chitose Internasional and Tempo Inti 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 Chitose Internasional and Tempo Inti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chitose Internasional Tbk and Tempo Inti Media, you can compare the effects of market volatilities on Chitose Internasional and Tempo Inti 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 Chitose Internasional with a short position of Tempo Inti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chitose Internasional and Tempo Inti.

Diversification Opportunities for Chitose Internasional and Tempo Inti

0.6

Correlation Coefficient

Chitose Internasional  Tempo Inti

Poor diversification

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

Pair Corralation between Chitose Internasional and Tempo Inti

Assuming the 90 days trading horizon Chitose Internasional is expected to generate 2.53 times less return on investment than Tempo Inti. But when comparing it to its historical volatility, Chitose Internasional Tbk is 1.26 times less risky than Tempo Inti. It trades about 0.03 of its potential returns per unit of risk. Tempo Inti Media is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,200  in Tempo Inti Media on September 28, 2024 and sell it today you would earn a total of  7,200  from holding Tempo Inti Media or generate 78.26% return on investment over 90 days.

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

Chitose Internasional Tbk  vs.  Tempo Inti Media

Chitose Internasional Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chitose Internasional Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Chitose Internasional may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tempo Inti Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tempo Inti Media 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Chitose Internasional and Tempo Inti

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

The idea behind Chitose Internasional Tbk and Tempo Inti Media 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.