Correlation Between Trias Sentosa and Asiaplast Industries

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

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

Diversification Opportunities for Trias Sentosa and Asiaplast Industries

-0.29

Correlation Coefficient

Trias Sentosa  Asiaplast Industries

Very good diversification

The 3 months correlation between Trias and Asiaplast is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Trias Sentosa Tbk and Asiaplast Industries Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiaplast Industries Tbk and Trias Sentosa 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 Trias Sentosa Tbk are associated (or correlated) with Asiaplast Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiaplast Industries Tbk has no effect on the direction of Trias Sentosa i.e., Trias Sentosa and Asiaplast Industries go up and down completely randomly.

Pair Corralation between Trias Sentosa and Asiaplast Industries

Assuming the 90 days trading horizon Trias Sentosa Tbk is expected to under-perform the Asiaplast Industries. But the stock apears to be less risky and, when comparing its historical volatility, Trias Sentosa Tbk is 1.48 times less risky than Asiaplast Industries. The stock trades about -0.02 of its potential returns per unit of risk. The Asiaplast Industries Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  23,974  in Asiaplast Industries Tbk on September 29, 2024 and sell it today you would earn a total of  33,026  from holding Asiaplast Industries Tbk or generate 137.76% return on investment over 90 days.

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

Trias Sentosa Tbk  vs.  Asiaplast Industries Tbk

Trias Sentosa Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trias Sentosa Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Trias Sentosa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asiaplast Industries Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Trias Sentosa Tbk and Asiaplast Industries 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.