Correlation Between Trans Power and Batulicin Nusantara

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

By analyzing existing cross correlation between Trans Power Marine and Batulicin Nusantara Maritim, you can compare the effects of market volatilities on Trans Power and Batulicin Nusantara 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 Trans Power with a short position of Batulicin Nusantara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trans Power and Batulicin Nusantara.

Diversification Opportunities for Trans Power and Batulicin Nusantara

-0.67

Correlation Coefficient

Trans Power  Batulicin Nusantara

Excellent diversification

The 3 months correlation between Trans and Batulicin is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Trans Power Marine and Batulicin Nusantara Maritim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batulicin Nusantara and Trans Power 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 Trans Power Marine are associated (or correlated) with Batulicin Nusantara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batulicin Nusantara has no effect on the direction of Trans Power i.e., Trans Power and Batulicin Nusantara go up and down completely randomly.

Pair Corralation between Trans Power and Batulicin Nusantara

Assuming the 90 days trading horizon Trans Power Marine is expected to under-perform the Batulicin Nusantara. But the stock apears to be less risky and, when comparing its historical volatility, Trans Power Marine is 2.24 times less risky than Batulicin Nusantara. The stock trades about -0.19 of its potential returns per unit of risk. The Batulicin Nusantara Maritim is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  23,800  in Batulicin Nusantara Maritim on October 25, 2024 and sell it today you would earn a total of  18,000  from holding Batulicin Nusantara Maritim or generate 75.63% return on investment over 90 days.

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

Trans Power Marine  vs.  Batulicin Nusantara Maritim

Trans Power Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trans Power Marine 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.

Batulicin Nusantara

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Batulicin Nusantara Maritim are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Batulicin Nusantara disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trans Power and Batulicin Nusantara

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

The idea behind Trans Power Marine and Batulicin Nusantara Maritim 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.