Correlation Between Trias Sentosa and Unggul Indah

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

Diversification Opportunities for Trias Sentosa and Unggul Indah

0.9

Correlation Coefficient

Trias Sentosa  Unggul Indah

Almost no diversification

The 3 months correlation between Trias and Unggul is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Trias Sentosa Tbk and Unggul Indah Cahaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unggul Indah Cahaya 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 Unggul Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unggul Indah Cahaya has no effect on the direction of Trias Sentosa i.e., Trias Sentosa and Unggul Indah go up and down completely randomly.

Pair Corralation between Trias Sentosa and Unggul Indah

Assuming the 90 days trading horizon Trias Sentosa Tbk is expected to under-perform the Unggul Indah. But the stock apears to be less risky and, when comparing its historical volatility, Trias Sentosa Tbk is 1.69 times less risky than Unggul Indah. The stock trades about -0.26 of its potential returns per unit of risk. The Unggul Indah Cahaya is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  797,500  in Unggul Indah Cahaya on December 30, 2024 and sell it today you would lose (82,500) from holding Unggul Indah Cahaya or give up 10.34% of portfolio value over 90 days.

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

Trias Sentosa Tbk  vs.  Unggul Indah Cahaya

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.

Unggul Indah Cahaya

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unggul Indah Cahaya 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 Unggul Indah

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

The idea behind Trias Sentosa Tbk and Unggul Indah Cahaya 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 Global Correlations module to find global opportunities by holding instruments from different markets.