Correlation Between Total Bangun and PT Temas

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

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

Diversification Opportunities for Total Bangun and PT Temas

0.58

Correlation Coefficient

Total Bangun  PT Temas

Very weak diversification

The 3 months correlation between Total and TMAS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Total Bangun Persada and PT Temas Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Temas Tbk and Total Bangun 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 Total Bangun Persada are associated (or correlated) with PT Temas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Temas Tbk has no effect on the direction of Total Bangun i.e., Total Bangun and PT Temas go up and down completely randomly.

Pair Corralation between Total Bangun and PT Temas

Assuming the 90 days trading horizon Total Bangun Persada is expected to under-perform the PT Temas. But the stock apears to be less risky and, when comparing its historical volatility, Total Bangun Persada is 1.48 times less risky than PT Temas. The stock trades about -0.23 of its potential returns per unit of risk. The PT Temas Tbk is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  13,900  in PT Temas Tbk on November 29, 2024 and sell it today you would lose (500.00) from holding PT Temas Tbk or give up 3.6% of portfolio value over 90 days.

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

Total Bangun Persada  vs.  PT Temas Tbk

Total Bangun Persada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Total Bangun Persada 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 March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PT Temas Tbk

Risk-Adjusted Performance

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 quite persistent forward-looking signals, PT Temas 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 Total Bangun and PT Temas

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

The idea behind Total Bangun Persada and PT Temas 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.