Correlation Between Transkon Jaya and Sumber Tani

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

By analyzing existing cross correlation between Transkon Jaya Pt and Sumber Tani Agung, you can compare the effects of market volatilities on Transkon Jaya and Sumber Tani 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 Transkon Jaya with a short position of Sumber Tani. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transkon Jaya and Sumber Tani.

Diversification Opportunities for Transkon Jaya and Sumber Tani

-0.48

Correlation Coefficient

Transkon Jaya  Sumber Tani

Very good diversification

The 3 months correlation between Transkon and Sumber is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Transkon Jaya Pt and Sumber Tani Agung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Tani Agung and Transkon Jaya 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 Transkon Jaya Pt are associated (or correlated) with Sumber Tani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Tani Agung has no effect on the direction of Transkon Jaya i.e., Transkon Jaya and Sumber Tani go up and down completely randomly.

Pair Corralation between Transkon Jaya and Sumber Tani

Assuming the 90 days trading horizon Transkon Jaya Pt is expected to under-perform the Sumber Tani. In addition to that, Transkon Jaya is 1.6 times more volatile than Sumber Tani Agung. It trades about -0.11 of its total potential returns per unit of risk. Sumber Tani Agung is currently generating about 0.07 per unit of volatility. If you would invest  80,000  in Sumber Tani Agung on December 22, 2024 and sell it today you would earn a total of  4,500  from holding Sumber Tani Agung or generate 5.63% return on investment over 90 days.

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

Transkon Jaya Pt  vs.  Sumber Tani Agung

Transkon Jaya Pt

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transkon Jaya Pt 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.

Sumber Tani Agung

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sumber Tani Agung are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sumber Tani may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Transkon Jaya and Sumber Tani

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

The idea behind Transkon Jaya Pt and Sumber Tani Agung 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.