Correlation Between Trimegah Karya and Siloam International

Can any of the company-specific risk be diversified away by investing in both Trimegah Karya and Siloam International 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 Siloam International 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 Siloam International Hospitals, you can compare the effects of market volatilities on Trimegah Karya and Siloam International 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 Siloam International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trimegah Karya and Siloam International.

Diversification Opportunities for Trimegah Karya and Siloam International

0.12

Correlation Coefficient

Trimegah Karya  Siloam International

Average diversification

The 3 months correlation between Trimegah and Siloam is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Trimegah Karya Pratama and Siloam International Hospitals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siloam International 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 Siloam International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siloam International has no effect on the direction of Trimegah Karya i.e., Trimegah Karya and Siloam International go up and down completely randomly.

Pair Corralation between Trimegah Karya and Siloam International

Assuming the 90 days trading horizon Trimegah Karya Pratama is expected to under-perform the Siloam International. But the stock apears to be less risky and, when comparing its historical volatility, Trimegah Karya Pratama is 1.16 times less risky than Siloam International. The stock trades about -0.04 of its potential returns per unit of risk. The Siloam International Hospitals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  288,000  in Siloam International Hospitals on September 12, 2024 and sell it today you would earn a total of  22,000  from holding Siloam International Hospitals or generate 7.64% return on investment over 90 days.

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

Trimegah Karya Pratama  vs.  Siloam International Hospitals

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.

Siloam International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siloam International Hospitals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Siloam International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Trimegah Karya and Siloam International

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

The idea behind Trimegah Karya Pratama and Siloam International Hospitals 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.