Correlation Between PT Semen and Trend Micro

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

By analyzing existing cross correlation between PT Semen Indonesia and Trend Micro ADR, you can compare the effects of market volatilities on PT Semen and Trend Micro 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 Semen with a short position of Trend Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Semen and Trend Micro.

Diversification Opportunities for PT Semen and Trend Micro

0.73

Correlation Coefficient

PT Semen  Trend Micro

Poor diversification

The 3 months correlation between PSGTF and Trend is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding PT Semen Indonesia and Trend Micro ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trend Micro ADR and PT Semen 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 Semen Indonesia are associated (or correlated) with Trend Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trend Micro ADR has no effect on the direction of PT Semen i.e., PT Semen and Trend Micro go up and down completely randomly.

Pair Corralation between PT Semen and Trend Micro

Assuming the 90 days horizon PT Semen Indonesia is expected to under-perform the Trend Micro. In addition to that, PT Semen is 1.37 times more volatile than Trend Micro ADR. It trades about -0.22 of its total potential returns per unit of risk. Trend Micro ADR is currently generating about 0.14 per unit of volatility. If you would invest  5,211  in Trend Micro ADR on September 18, 2024 and sell it today you would earn a total of  255.00  from holding Trend Micro ADR or generate 4.89% return on investment over 90 days.

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

PT Semen Indonesia  vs.  Trend Micro ADR

PT Semen Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Semen Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Trend Micro ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trend Micro ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PT Semen and Trend Micro

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

The idea behind PT Semen Indonesia and Trend Micro ADR 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.