Correlation Between Perusahaan Perseroan and Tokio Marine

Can any of the company-specific risk be diversified away by investing in both Perusahaan Perseroan and Tokio Marine 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 Perusahaan Perseroan and Tokio Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perusahaan Perseroan PT and Tokio Marine Holdings, you can compare the effects of market volatilities on Perusahaan Perseroan and Tokio Marine 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 Perusahaan Perseroan with a short position of Tokio Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perusahaan Perseroan and Tokio Marine.

Diversification Opportunities for Perusahaan Perseroan and Tokio Marine

-0.24

Correlation Coefficient

Perusahaan Perseroan  Tokio Marine

Very good diversification

The 3 months correlation between Perusahaan and Tokio is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and Tokio Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokio Marine Holdings and Perusahaan Perseroan 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 Perusahaan Perseroan PT are associated (or correlated) with Tokio Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokio Marine Holdings has no effect on the direction of Perusahaan Perseroan i.e., Perusahaan Perseroan and Tokio Marine go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and Tokio Marine

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the Tokio Marine. But the stock apears to be less risky and, when comparing its historical volatility, Perusahaan Perseroan PT is 1.2 times less risky than Tokio Marine. The stock trades about -0.05 of its potential returns per unit of risk. The Tokio Marine Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,218  in Tokio Marine Holdings on October 2, 2024 and sell it today you would earn a total of  1,338  from holding Tokio Marine Holdings or generate 60.32% return on investment over 90 days.

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

Perusahaan Perseroan PT  vs.  Tokio Marine Holdings

Perusahaan Perseroan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perusahaan Perseroan PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Tokio Marine Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tokio Marine Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Tokio Marine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Perusahaan Perseroan and Tokio Marine

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

The idea behind Perusahaan Perseroan PT and Tokio Marine Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.