Correlation Between Transcoal Pacific and Karya Bersama

Can any of the company-specific risk be diversified away by investing in both Transcoal Pacific and Karya Bersama 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 Transcoal Pacific and Karya Bersama into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Transcoal Pacific Tbk and Karya Bersama Anugerah, you can compare the effects of market volatilities on Transcoal Pacific and Karya Bersama 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 Transcoal Pacific with a short position of Karya Bersama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcoal Pacific and Karya Bersama.

Diversification Opportunities for Transcoal Pacific and Karya Bersama

-0.77

Correlation Coefficient

Transcoal Pacific  Karya Bersama

Pay attention - limited upside

The 3 months correlation between Transcoal and Karya is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Transcoal Pacific Tbk and Karya Bersama Anugerah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karya Bersama Anugerah and Transcoal Pacific 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 Transcoal Pacific Tbk are associated (or correlated) with Karya Bersama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karya Bersama Anugerah has no effect on the direction of Transcoal Pacific i.e., Transcoal Pacific and Karya Bersama go up and down completely randomly.

Pair Corralation between Transcoal Pacific and Karya Bersama

Assuming the 90 days trading horizon Transcoal Pacific Tbk is expected to under-perform the Karya Bersama. But the stock apears to be less risky and, when comparing its historical volatility, Transcoal Pacific Tbk is 2.28 times less risky than Karya Bersama. The stock trades about -0.11 of its potential returns per unit of risk. The Karya Bersama Anugerah is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,200  in Karya Bersama Anugerah on December 22, 2024 and sell it today you would earn a total of  900.00  from holding Karya Bersama Anugerah or generate 40.91% return on investment over 90 days.

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

Transcoal Pacific Tbk  vs.  Karya Bersama Anugerah

Transcoal Pacific Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transcoal Pacific Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Karya Bersama Anugerah

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Karya Bersama Anugerah are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Karya Bersama disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transcoal Pacific and Karya Bersama

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

The idea behind Transcoal Pacific Tbk and Karya Bersama Anugerah 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.