Correlation Between Equity Development and Trimegah Karya

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

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

Diversification Opportunities for Equity Development and Trimegah Karya

-0.11

Correlation Coefficient

Equity Development  Trimegah Karya

Good diversification

The 3 months correlation between Equity and Trimegah is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Equity Development Investment 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 Equity Development 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 Equity Development Investment 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 Equity Development i.e., Equity Development and Trimegah Karya go up and down completely randomly.

Pair Corralation between Equity Development and Trimegah Karya

Assuming the 90 days trading horizon Equity Development Investment is expected to under-perform the Trimegah Karya. But the stock apears to be less risky and, when comparing its historical volatility, Equity Development Investment is 2.54 times less risky than Trimegah Karya. The stock trades about 0.0 of its potential returns per unit of risk. The Trimegah Karya Pratama is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,700  in Trimegah Karya Pratama on December 31, 2024 and sell it today you would earn a total of  1,600  from holding Trimegah Karya Pratama or generate 28.07% return on investment over 90 days.

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

Equity Development Investment  vs.  Trimegah Karya Pratama

Equity Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equity Development Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Equity Development is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Trimegah Karya Pratama

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trimegah Karya Pratama are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Trimegah Karya disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equity Development and Trimegah Karya

The main advantage of trading using opposite Equity Development and Trimegah Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Development 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 Equity Development Investment 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.