Correlation Between Trust Finance and Asuransi Harta

Can any of the company-specific risk be diversified away by investing in both Trust Finance and Asuransi Harta 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 Trust Finance and Asuransi Harta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trust Finance Indonesia and Asuransi Harta Aman, you can compare the effects of market volatilities on Trust Finance and Asuransi Harta 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 Trust Finance with a short position of Asuransi Harta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trust Finance and Asuransi Harta.

Diversification Opportunities for Trust Finance and Asuransi Harta

-0.37

Correlation Coefficient

Trust Finance  Asuransi Harta

Very good diversification

The 3 months correlation between Trust and Asuransi is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Trust Finance Indonesia and Asuransi Harta Aman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Harta Aman and Trust Finance 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 Trust Finance Indonesia are associated (or correlated) with Asuransi Harta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Harta Aman has no effect on the direction of Trust Finance i.e., Trust Finance and Asuransi Harta go up and down completely randomly.

Pair Corralation between Trust Finance and Asuransi Harta

Assuming the 90 days trading horizon Trust Finance Indonesia is expected to under-perform the Asuransi Harta. In addition to that, Trust Finance is 2.91 times more volatile than Asuransi Harta Aman. It trades about -0.05 of its total potential returns per unit of risk. Asuransi Harta Aman is currently generating about -0.14 per unit of volatility. If you would invest  8,600  in Asuransi Harta Aman on December 28, 2024 and sell it today you would lose (1,900) from holding Asuransi Harta Aman or give up 22.09% of portfolio value over 90 days.

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

Trust Finance Indonesia  vs.  Asuransi Harta Aman

Trust Finance Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trust Finance Indonesia 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.

Asuransi Harta Aman

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asuransi Harta Aman 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.

Pair Trading with Trust Finance and Asuransi Harta

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

The idea behind Trust Finance Indonesia and Asuransi Harta Aman 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.