Correlation Between Tifico Fiber and Sunson Textile

Can any of the company-specific risk be diversified away by investing in both Tifico Fiber and Sunson Textile 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 Tifico Fiber and Sunson Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tifico Fiber Indonesia and Sunson Textile Manufacturer, you can compare the effects of market volatilities on Tifico Fiber and Sunson Textile 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 Tifico Fiber with a short position of Sunson Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tifico Fiber and Sunson Textile.

Diversification Opportunities for Tifico Fiber and Sunson Textile

0.0

Correlation Coefficient

Tifico Fiber  Sunson Textile

Pay attention - limited upside

The 3 months correlation between Tifico and Sunson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tifico Fiber Indonesia and Sunson Textile Manufacturer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunson Textile Manuf and Tifico Fiber 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 Tifico Fiber Indonesia are associated (or correlated) with Sunson Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunson Textile Manuf has no effect on the direction of Tifico Fiber i.e., Tifico Fiber and Sunson Textile go up and down completely randomly.

Pair Corralation between Tifico Fiber and Sunson Textile

Assuming the 90 days trading horizon Tifico Fiber Indonesia is expected to generate 0.12 times more return on investment than Sunson Textile. However, Tifico Fiber Indonesia is 8.49 times less risky than Sunson Textile. It trades about 0.0 of its potential returns per unit of risk. Sunson Textile Manufacturer is currently generating about -0.08 per unit of risk. If you would invest  63,500  in Tifico Fiber Indonesia on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Tifico Fiber Indonesia or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Tifico Fiber Indonesia  vs.  Sunson Textile Manufacturer

Tifico Fiber Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tifico Fiber Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Tifico Fiber is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sunson Textile Manuf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunson Textile Manufacturer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sunson Textile is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Tifico Fiber and Sunson Textile

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

The idea behind Tifico Fiber Indonesia and Sunson Textile Manufacturer 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.