Correlation Between Karya Bersama and Transcoal Pacific

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

By analyzing existing cross correlation between Karya Bersama Anugerah and Transcoal Pacific Tbk, you can compare the effects of market volatilities on Karya Bersama and Transcoal Pacific 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 Karya Bersama with a short position of Transcoal Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karya Bersama and Transcoal Pacific.

Diversification Opportunities for Karya Bersama and Transcoal Pacific

-0.77

Correlation Coefficient

Karya Bersama  Transcoal Pacific

Pay attention - limited upside

The 3 months correlation between Karya and Transcoal is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Karya Bersama Anugerah and Transcoal Pacific Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcoal Pacific Tbk and Karya Bersama 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 Karya Bersama Anugerah are associated (or correlated) with Transcoal Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcoal Pacific Tbk has no effect on the direction of Karya Bersama i.e., Karya Bersama and Transcoal Pacific go up and down completely randomly.

Pair Corralation between Karya Bersama and Transcoal Pacific

Assuming the 90 days trading horizon Karya Bersama Anugerah is expected to generate 2.28 times more return on investment than Transcoal Pacific. However, Karya Bersama is 2.28 times more volatile than Transcoal Pacific Tbk. It trades about 0.17 of its potential returns per unit of risk. Transcoal Pacific Tbk is currently generating about -0.11 per unit of risk. If you would invest  2,200  in Karya Bersama Anugerah on December 22, 2024 and sell it today you would earn a total of  900.00  from holding Karya Bersama Anugerah or generate 40.91% return on investment over 90 days.

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

Karya Bersama Anugerah  vs.  Transcoal Pacific Tbk

Karya Bersama Anugerah

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Karya Bersama Anugerah are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Karya Bersama disclosed solid returns over the last few months and may actually be approaching a breakup point.

Transcoal Pacific Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transcoal Pacific Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Karya Bersama and Transcoal Pacific

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

The idea behind Karya Bersama Anugerah and Transcoal Pacific 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.