Correlation Between PT Temas and Perdana Karya

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

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

Diversification Opportunities for PT Temas and Perdana Karya

0.4

Correlation Coefficient

PT Temas  Perdana Karya

Very weak diversification

The 3 months correlation between TMAS and Perdana is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding PT Temas Tbk and Perdana Karya Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdana Karya Perkasa and PT Temas 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 PT Temas Tbk are associated (or correlated) with Perdana Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdana Karya Perkasa has no effect on the direction of PT Temas i.e., PT Temas and Perdana Karya go up and down completely randomly.

Pair Corralation between PT Temas and Perdana Karya

Assuming the 90 days trading horizon PT Temas Tbk is expected to under-perform the Perdana Karya. But the stock apears to be less risky and, when comparing its historical volatility, PT Temas Tbk is 1.85 times less risky than Perdana Karya. The stock trades about -0.11 of its potential returns per unit of risk. The Perdana Karya Perkasa is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  77,500  in Perdana Karya Perkasa on October 25, 2024 and sell it today you would lose (2,500) from holding Perdana Karya Perkasa or give up 3.23% of portfolio value over 90 days.

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

PT Temas Tbk  vs.  Perdana Karya Perkasa

PT Temas Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Temas 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.

Perdana Karya Perkasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perdana Karya Perkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PT Temas and Perdana Karya

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

The idea behind PT Temas Tbk and Perdana Karya Perkasa 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.