Correlation Between Timah Persero and Citatah Tbk

Can any of the company-specific risk be diversified away by investing in both Timah Persero and Citatah Tbk 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 Timah Persero and Citatah Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Timah Persero and Citatah Tbk

-0.06

Correlation Coefficient

Timah Persero  Citatah Tbk

Good diversification

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

Pair Corralation between Timah Persero and Citatah Tbk

Assuming the 90 days trading horizon Timah Persero Tbk is expected to under-perform the Citatah Tbk. In addition to that, Timah Persero is 1.57 times more volatile than Citatah Tbk. It trades about -0.04 of its total potential returns per unit of risk. Citatah Tbk is currently generating about 0.04 per unit of volatility. If you would invest  2,600  in Citatah Tbk on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Citatah Tbk or generate 3.85% return on investment over 90 days.

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

Timah Persero Tbk  vs.  Citatah Tbk

Timah Persero Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timah Persero 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.

Citatah Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citatah Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Citatah Tbk 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 Timah Persero and Citatah Tbk

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

The idea behind Timah Persero Tbk and Citatah Tbk 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.