Correlation Between Trust Finance and PT Kusuma

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

Diversification Opportunities for Trust Finance and PT Kusuma

-0.38

Correlation Coefficient

Trust Finance  PT Kusuma

Very good diversification

The 3 months correlation between Trust and KKES is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Trust Finance Indonesia and PT Kusuma Kemindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Kusuma Kemindo 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 PT Kusuma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Kusuma Kemindo has no effect on the direction of Trust Finance i.e., Trust Finance and PT Kusuma go up and down completely randomly.

Pair Corralation between Trust Finance and PT Kusuma

Assuming the 90 days trading horizon Trust Finance Indonesia is expected to under-perform the PT Kusuma. In addition to that, Trust Finance is 2.32 times more volatile than PT Kusuma Kemindo. It trades about -0.05 of its total potential returns per unit of risk. PT Kusuma Kemindo is currently generating about 0.0 per unit of volatility. If you would invest  2,600  in PT Kusuma Kemindo on December 29, 2024 and sell it today you would lose (100.00) from holding PT Kusuma Kemindo or give up 3.85% 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.  PT Kusuma Kemindo

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.

PT Kusuma Kemindo

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Kusuma Kemindo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Kusuma 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 Trust Finance and PT Kusuma

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

The idea behind Trust Finance Indonesia and PT Kusuma Kemindo 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.