Correlation Between PT Trimuda and Sriwahana

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

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

Diversification Opportunities for PT Trimuda and Sriwahana

0.5

Correlation Coefficient

PT Trimuda  Sriwahana

Very weak diversification

The 3 months correlation between TNCA and Sriwahana is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PT Trimuda Nuansa and Sriwahana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sriwahana and PT Trimuda 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 Trimuda Nuansa are associated (or correlated) with Sriwahana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sriwahana has no effect on the direction of PT Trimuda i.e., PT Trimuda and Sriwahana go up and down completely randomly.

Pair Corralation between PT Trimuda and Sriwahana

Assuming the 90 days trading horizon PT Trimuda Nuansa is expected to under-perform the Sriwahana. But the stock apears to be less risky and, when comparing its historical volatility, PT Trimuda Nuansa is 1.99 times less risky than Sriwahana. The stock trades about -0.25 of its potential returns per unit of risk. The Sriwahana is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,700  in Sriwahana on December 22, 2024 and sell it today you would lose (200.00) from holding Sriwahana or give up 7.41% of portfolio value over 90 days.

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

PT Trimuda Nuansa  vs.  Sriwahana

PT Trimuda Nuansa

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Trimuda Nuansa 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sriwahana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sriwahana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sriwahana 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 PT Trimuda and Sriwahana

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

The idea behind PT Trimuda Nuansa and Sriwahana 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.