Correlation Between Trimegah Securities and Reliance Securities

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

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

Diversification Opportunities for Trimegah Securities and Reliance Securities

-0.25

Correlation Coefficient

Trimegah Securities  Reliance Securities

Very good diversification

The 3 months correlation between Trimegah and Reliance is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Trimegah Securities Tbk and Reliance Securities Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Securities Tbk and Trimegah Securities 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 Trimegah Securities Tbk are associated (or correlated) with Reliance Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Securities Tbk has no effect on the direction of Trimegah Securities i.e., Trimegah Securities and Reliance Securities go up and down completely randomly.

Pair Corralation between Trimegah Securities and Reliance Securities

Assuming the 90 days trading horizon Trimegah Securities Tbk is expected to generate 0.54 times more return on investment than Reliance Securities. However, Trimegah Securities Tbk is 1.85 times less risky than Reliance Securities. It trades about 0.04 of its potential returns per unit of risk. Reliance Securities Tbk is currently generating about 0.01 per unit of risk. If you would invest  24,200  in Trimegah Securities Tbk on September 2, 2024 and sell it today you would earn a total of  10,200  from holding Trimegah Securities Tbk or generate 42.15% return on investment over 90 days.

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

Trimegah Securities Tbk  vs.  Reliance Securities Tbk

Trimegah Securities Tbk

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trimegah Securities Tbk are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Trimegah Securities disclosed solid returns over the last few months and may actually be approaching a breakup point.

Reliance Securities Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Trimegah Securities Tbk and Reliance Securities 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.