Correlation Between Asuransi Tugu and Asuransi Jiwa

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

By analyzing existing cross correlation between Asuransi Tugu Pratama and Asuransi Jiwa Sinarmas, you can compare the effects of market volatilities on Asuransi Tugu and Asuransi Jiwa 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 Asuransi Tugu with a short position of Asuransi Jiwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asuransi Tugu and Asuransi Jiwa.

Diversification Opportunities for Asuransi Tugu and Asuransi Jiwa

0.49

Correlation Coefficient

Asuransi Tugu  Asuransi Jiwa

Very weak diversification

The 3 months correlation between Asuransi and Asuransi is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Asuransi Tugu Pratama and Asuransi Jiwa Sinarmas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Jiwa Sinarmas and Asuransi Tugu 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 Asuransi Tugu Pratama are associated (or correlated) with Asuransi Jiwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Jiwa Sinarmas has no effect on the direction of Asuransi Tugu i.e., Asuransi Tugu and Asuransi Jiwa go up and down completely randomly.

Pair Corralation between Asuransi Tugu and Asuransi Jiwa

Assuming the 90 days trading horizon Asuransi Tugu Pratama is expected to generate 0.36 times more return on investment than Asuransi Jiwa. However, Asuransi Tugu Pratama is 2.76 times less risky than Asuransi Jiwa. It trades about -0.14 of its potential returns per unit of risk. Asuransi Jiwa Sinarmas is currently generating about -0.07 per unit of risk. If you would invest  105,500  in Asuransi Tugu Pratama on December 1, 2024 and sell it today you would lose (10,500) from holding Asuransi Tugu Pratama or give up 9.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Asuransi Tugu Pratama  vs.  Asuransi Jiwa Sinarmas

Asuransi Tugu Pratama

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asuransi Tugu Pratama 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.

Asuransi Jiwa Sinarmas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asuransi Jiwa Sinarmas 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 Asuransi Tugu and Asuransi Jiwa

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

The idea behind Asuransi Tugu Pratama and Asuransi Jiwa Sinarmas 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.