Correlation Between Trias Sentosa and PT Mulia

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Can any of the company-specific risk be diversified away by investing in both Trias Sentosa and PT Mulia 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 PT Mulia 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 PT Mulia Industrindo, you can compare the effects of market volatilities on Trias Sentosa and PT Mulia 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 PT Mulia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trias Sentosa and PT Mulia.

Diversification Opportunities for Trias Sentosa and PT Mulia

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Trias and MLIA is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Trias Sentosa Tbk and PT Mulia Industrindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Mulia Industrindo 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 PT Mulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Mulia Industrindo has no effect on the direction of Trias Sentosa i.e., Trias Sentosa and PT Mulia go up and down completely randomly.

Pair Corralation between Trias Sentosa and PT Mulia

Assuming the 90 days trading horizon Trias Sentosa Tbk is expected to generate 1.43 times more return on investment than PT Mulia. However, Trias Sentosa is 1.43 times more volatile than PT Mulia Industrindo. It trades about 0.01 of its potential returns per unit of risk. PT Mulia Industrindo is currently generating about -0.16 per unit of risk. If you would invest  49,800  in Trias Sentosa Tbk on September 5, 2024 and sell it today you would earn a total of  200.00  from holding Trias Sentosa Tbk or generate 0.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.41%
ValuesDaily Returns

Trias Sentosa Tbk  vs.  PT Mulia Industrindo

 Performance 
       Timeline  
Trias Sentosa Tbk 

Risk-Adjusted Performance

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Weak
 
Strong
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.
PT Mulia Industrindo 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PT Mulia Industrindo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Trias Sentosa and PT Mulia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Trias Sentosa and PT Mulia

The main advantage of trading using opposite Trias Sentosa and PT Mulia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trias Sentosa position performs unexpectedly, PT Mulia 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 Mulia will offset losses from the drop in PT Mulia's long position.
The idea behind Trias Sentosa Tbk and PT Mulia Industrindo 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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