Correlation Between PT Mulia and Trias Sentosa

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

By analyzing existing cross correlation between PT Mulia Industrindo and Trias Sentosa Tbk, you can compare the effects of market volatilities on PT Mulia and Trias Sentosa 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 Mulia with a short position of Trias Sentosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Mulia and Trias Sentosa.

Diversification Opportunities for PT Mulia and Trias Sentosa

-0.2

Correlation Coefficient

PT Mulia  Trias Sentosa

Good diversification

The 3 months correlation between MLIA and Trias is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding PT Mulia Industrindo and Trias Sentosa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trias Sentosa Tbk and PT Mulia 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 Mulia Industrindo are associated (or correlated) with Trias Sentosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trias Sentosa Tbk has no effect on the direction of PT Mulia i.e., PT Mulia and Trias Sentosa go up and down completely randomly.

Pair Corralation between PT Mulia and Trias Sentosa

Assuming the 90 days trading horizon PT Mulia Industrindo is expected to under-perform the Trias Sentosa. But the stock apears to be less risky and, when comparing its historical volatility, PT Mulia Industrindo is 1.53 times less risky than Trias Sentosa. The stock trades about -0.21 of its potential returns per unit of risk. The Trias Sentosa Tbk is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  49,800  in Trias Sentosa Tbk on September 9, 2024 and sell it today you would lose (800.00) from holding Trias Sentosa Tbk or give up 1.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

PT Mulia Industrindo  vs.  Trias Sentosa Tbk

PT Mulia Industrindo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Mulia Industrindo 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.

Trias Sentosa Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PT Mulia and Trias Sentosa

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

The idea behind PT Mulia Industrindo and Trias Sentosa 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.