Correlation Between Trias Sentosa and Suparma Tbk

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

Diversification Opportunities for Trias Sentosa and Suparma Tbk

0.59

Correlation Coefficient

Trias Sentosa  Suparma Tbk

Very weak diversification

The 3 months correlation between Trias and Suparma is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Trias Sentosa Tbk and Suparma Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suparma 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 Suparma Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suparma Tbk has no effect on the direction of Trias Sentosa i.e., Trias Sentosa and Suparma Tbk go up and down completely randomly.

Pair Corralation between Trias Sentosa and Suparma Tbk

Assuming the 90 days trading horizon Trias Sentosa Tbk is expected to under-perform the Suparma Tbk. But the stock apears to be less risky and, when comparing its historical volatility, Trias Sentosa Tbk is 1.47 times less risky than Suparma Tbk. The stock trades about -0.26 of its potential returns per unit of risk. The Suparma Tbk is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  29,600  in Suparma Tbk on December 30, 2024 and sell it today you would lose (2,400) from holding Suparma Tbk or give up 8.11% of portfolio value over 90 days.

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

Trias Sentosa Tbk  vs.  Suparma Tbk

Trias Sentosa Tbk

Risk-Adjusted Performance

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 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.

Suparma Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suparma Tbk 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.

Pair Trading with Trias Sentosa and Suparma Tbk

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

The idea behind Trias Sentosa Tbk and Suparma 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.