Correlation Between Armada Berjaya and PT Trimuda

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

By analyzing existing cross correlation between Armada Berjaya Trans and PT Trimuda Nuansa, you can compare the effects of market volatilities on Armada Berjaya and PT Trimuda 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 Armada Berjaya with a short position of PT Trimuda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Berjaya and PT Trimuda.

Diversification Opportunities for Armada Berjaya and PT Trimuda

0.87

Correlation Coefficient

Armada Berjaya  PT Trimuda

Very poor diversification

The 3 months correlation between Armada and TNCA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Armada Berjaya Trans and PT Trimuda Nuansa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Trimuda Nuansa and Armada Berjaya 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 Armada Berjaya Trans are associated (or correlated) with PT Trimuda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Trimuda Nuansa has no effect on the direction of Armada Berjaya i.e., Armada Berjaya and PT Trimuda go up and down completely randomly.

Pair Corralation between Armada Berjaya and PT Trimuda

Assuming the 90 days trading horizon Armada Berjaya Trans is expected to generate 0.27 times more return on investment than PT Trimuda. However, Armada Berjaya Trans is 3.71 times less risky than PT Trimuda. It trades about -0.09 of its potential returns per unit of risk. PT Trimuda Nuansa is currently generating about -0.06 per unit of risk. If you would invest  11,000  in Armada Berjaya Trans on September 12, 2024 and sell it today you would lose (1,500) from holding Armada Berjaya Trans or give up 13.64% of portfolio value over 90 days.

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

Armada Berjaya Trans  vs.  PT Trimuda Nuansa

Armada Berjaya Trans

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Berjaya Trans 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.

PT Trimuda Nuansa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Trimuda Nuansa 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 Armada Berjaya and PT Trimuda

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

The idea behind Armada Berjaya Trans and PT Trimuda Nuansa 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..