Correlation Between Tembaga Mulia and Unggul Indah

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

By analyzing existing cross correlation between Tembaga Mulia Semanan and Unggul Indah Cahaya, you can compare the effects of market volatilities on Tembaga Mulia and Unggul Indah 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 Tembaga Mulia with a short position of Unggul Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tembaga Mulia and Unggul Indah.

Diversification Opportunities for Tembaga Mulia and Unggul Indah

-0.06

Correlation Coefficient

Tembaga Mulia  Unggul Indah

Good diversification

The 3 months correlation between Tembaga and Unggul is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tembaga Mulia Semanan and Unggul Indah Cahaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unggul Indah Cahaya and Tembaga 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 Tembaga Mulia Semanan are associated (or correlated) with Unggul Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unggul Indah Cahaya has no effect on the direction of Tembaga Mulia i.e., Tembaga Mulia and Unggul Indah go up and down completely randomly.

Pair Corralation between Tembaga Mulia and Unggul Indah

Assuming the 90 days trading horizon Tembaga Mulia is expected to generate 1.29 times less return on investment than Unggul Indah. In addition to that, Tembaga Mulia is 1.94 times more volatile than Unggul Indah Cahaya. It trades about 0.03 of its total potential returns per unit of risk. Unggul Indah Cahaya is currently generating about 0.09 per unit of volatility. If you would invest  777,500  in Unggul Indah Cahaya on September 4, 2024 and sell it today you would earn a total of  47,500  from holding Unggul Indah Cahaya or generate 6.11% return on investment over 90 days.

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

Tembaga Mulia Semanan  vs.  Unggul Indah Cahaya

Tembaga Mulia Semanan

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tembaga Mulia Semanan are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Tembaga Mulia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Unggul Indah Cahaya

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unggul Indah Cahaya are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Unggul Indah may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tembaga Mulia and Unggul Indah

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

The idea behind Tembaga Mulia Semanan and Unggul Indah Cahaya 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.