Correlation Between Timah Persero and Tirta Mahakam

Can any of the company-specific risk be diversified away by investing in both Timah Persero 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 Timah Persero and Tirta Mahakam 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 Tirta Mahakam Resources, you can compare the effects of market volatilities on Timah Persero 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 Timah Persero with a short position of Tirta Mahakam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timah Persero and Tirta Mahakam.

Diversification Opportunities for Timah Persero and Tirta Mahakam

-0.73

Correlation Coefficient

Timah Persero  Tirta Mahakam

Pay attention - limited upside

The 3 months correlation between Timah and Tirta is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Timah Persero Tbk 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 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 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 Timah Persero i.e., Timah Persero and Tirta Mahakam go up and down completely randomly.

Pair Corralation between Timah Persero and Tirta Mahakam

Assuming the 90 days trading horizon Timah Persero Tbk is expected to generate 0.51 times more return on investment than Tirta Mahakam. However, Timah Persero Tbk is 1.96 times less risky than Tirta Mahakam. It trades about 0.05 of its potential returns per unit of risk. Tirta Mahakam Resources is currently generating about -0.17 per unit of risk. If you would invest  99,500  in Timah Persero Tbk on September 5, 2024 and sell it today you would earn a total of  8,000  from holding Timah Persero Tbk or generate 8.04% return on investment over 90 days.

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

Timah Persero Tbk  vs.  Tirta Mahakam Resources

Timah Persero Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Timah Persero Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Timah Persero may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tirta Mahakam Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tirta Mahakam Resources 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Timah Persero and Tirta Mahakam

The main advantage of trading using opposite Timah Persero and Tirta Mahakam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timah Persero 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 Timah Persero Tbk 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.