Correlation Between Tira Austenite and Matahari Department

Can any of the company-specific risk be diversified away by investing in both Tira Austenite and Matahari Department 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 Tira Austenite and Matahari Department into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Tira Austenite and Matahari Department

-0.51

Correlation Coefficient

Tira Austenite  Matahari Department

Excellent diversification

The 3 months correlation between Tira and Matahari is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tira Austenite Tbk and Matahari Department Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matahari Department Store and Tira Austenite 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 Tira Austenite Tbk are associated (or correlated) with Matahari Department. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matahari Department Store has no effect on the direction of Tira Austenite i.e., Tira Austenite and Matahari Department go up and down completely randomly.

Pair Corralation between Tira Austenite and Matahari Department

Assuming the 90 days trading horizon Tira Austenite Tbk is expected to generate 1.53 times more return on investment than Matahari Department. However, Tira Austenite is 1.53 times more volatile than Matahari Department Store. It trades about -0.09 of its potential returns per unit of risk. Matahari Department Store is currently generating about -0.27 per unit of risk. If you would invest  51,500  in Tira Austenite Tbk on September 1, 2024 and sell it today you would lose (2,300) from holding Tira Austenite Tbk or give up 4.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Tira Austenite Tbk  vs.  Matahari Department Store

Tira Austenite Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tira Austenite Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tira Austenite disclosed solid returns over the last few months and may actually be approaching a breakup point.

Matahari Department Store

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matahari Department Store 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Tira Austenite and Matahari Department

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

The idea behind Tira Austenite Tbk and Matahari Department Store 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.