Correlation Between PT Sreeya and Tirta Mahakam

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

By analyzing existing cross correlation between PT Sreeya Sewu and Tirta Mahakam Resources, you can compare the effects of market volatilities on PT Sreeya and Tirta Mahakam 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 Sreeya with a short position of Tirta Mahakam. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Sreeya and Tirta Mahakam.

Diversification Opportunities for PT Sreeya and Tirta Mahakam

-0.19

Correlation Coefficient

PT Sreeya  Tirta Mahakam

Good diversification

The 3 months correlation between SIPD and Tirta is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PT Sreeya Sewu and Tirta Mahakam Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tirta Mahakam Resources and PT Sreeya 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 Sreeya Sewu are associated (or correlated) with Tirta Mahakam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tirta Mahakam Resources has no effect on the direction of PT Sreeya i.e., PT Sreeya and Tirta Mahakam go up and down completely randomly.

Pair Corralation between PT Sreeya and Tirta Mahakam

Assuming the 90 days trading horizon PT Sreeya Sewu is expected to under-perform the Tirta Mahakam. But the stock apears to be less risky and, when comparing its historical volatility, PT Sreeya Sewu is 2.03 times less risky than Tirta Mahakam. The stock trades about -0.11 of its potential returns per unit of risk. The Tirta Mahakam Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,300  in Tirta Mahakam Resources on December 29, 2024 and sell it today you would earn a total of  1,100  from holding Tirta Mahakam Resources or generate 33.33% return on investment over 90 days.

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

PT Sreeya Sewu  vs.  Tirta Mahakam Resources

PT Sreeya Sewu

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Sreeya Sewu 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tirta Mahakam Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tirta Mahakam Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tirta Mahakam disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Sreeya and Tirta Mahakam

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

The idea behind PT Sreeya Sewu and Tirta Mahakam Resources 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.