Correlation Between Trimegah Karya and Equity Development

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

By analyzing existing cross correlation between Trimegah Karya Pratama and Equity Development Investment, you can compare the effects of market volatilities on Trimegah Karya and Equity Development 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 Trimegah Karya with a short position of Equity Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trimegah Karya and Equity Development.

Diversification Opportunities for Trimegah Karya and Equity Development

0.32

Correlation Coefficient

Trimegah Karya  Equity Development

Weak diversification

The 3 months correlation between Trimegah and Equity is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Trimegah Karya Pratama and Equity Development Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Development and Trimegah Karya 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 Trimegah Karya Pratama are associated (or correlated) with Equity Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Development has no effect on the direction of Trimegah Karya i.e., Trimegah Karya and Equity Development go up and down completely randomly.

Pair Corralation between Trimegah Karya and Equity Development

Assuming the 90 days trading horizon Trimegah Karya Pratama is expected to under-perform the Equity Development. But the stock apears to be less risky and, when comparing its historical volatility, Trimegah Karya Pratama is 1.07 times less risky than Equity Development. The stock trades about -0.04 of its potential returns per unit of risk. The Equity Development Investment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,200  in Equity Development Investment on September 12, 2024 and sell it today you would earn a total of  500.00  from holding Equity Development Investment or generate 9.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Trimegah Karya Pratama  vs.  Equity Development Investment

Trimegah Karya Pratama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trimegah Karya 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.

Equity Development

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Development Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Equity Development disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trimegah Karya and Equity Development

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

The idea behind Trimegah Karya Pratama and Equity Development Investment 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.