Correlation Between PT Temas and Bukit Asam

Can any of the company-specific risk be diversified away by investing in both PT Temas and Bukit Asam 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 Bukit Asam 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 Bukit Asam Tbk, you can compare the effects of market volatilities on PT Temas and Bukit Asam 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 Bukit Asam. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Temas and Bukit Asam.

Diversification Opportunities for PT Temas and Bukit Asam

0.85

Correlation Coefficient

PT Temas  Bukit Asam

Very poor diversification

The 3 months correlation between TMAS and Bukit is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding PT Temas Tbk and Bukit Asam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Asam Tbk 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 Bukit Asam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Asam Tbk has no effect on the direction of PT Temas i.e., PT Temas and Bukit Asam go up and down completely randomly.

Pair Corralation between PT Temas and Bukit Asam

Assuming the 90 days trading horizon PT Temas Tbk is expected to generate 11.98 times more return on investment than Bukit Asam. However, PT Temas is 11.98 times more volatile than Bukit Asam Tbk. It trades about 0.04 of its potential returns per unit of risk. Bukit Asam Tbk is currently generating about 0.03 per unit of risk. If you would invest  22,053  in PT Temas Tbk on October 9, 2024 and sell it today you would lose (8,253) from holding PT Temas Tbk or give up 37.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

PT Temas Tbk  vs.  Bukit Asam Tbk

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.

Bukit Asam Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bukit Asam Tbk 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 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 Bukit Asam

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

The idea behind PT Temas Tbk and Bukit Asam 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..