Correlation Between Visa and Trimegah Karya

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

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

Diversification Opportunities for Visa and Trimegah Karya

-0.25

Correlation Coefficient

Visa  Trimegah Karya

Very good diversification

The 3 months correlation between Visa and Trimegah is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Trimegah Karya Pratama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimegah Karya Pratama and Visa 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 Visa Class A are associated (or correlated) with Trimegah Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimegah Karya Pratama has no effect on the direction of Visa i.e., Visa and Trimegah Karya go up and down completely randomly.

Pair Corralation between Visa and Trimegah Karya

Taking into account the 90-day investment horizon Visa is expected to generate 3.21 times less return on investment than Trimegah Karya. But when comparing it to its historical volatility, Visa Class A is 5.66 times less risky than Trimegah Karya. It trades about 0.17 of its potential returns per unit of risk. Trimegah Karya Pratama is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,700  in Trimegah Karya Pratama on December 28, 2024 and sell it today you would earn a total of  1,600  from holding Trimegah Karya Pratama or generate 28.07% return on investment over 90 days.

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

Visa Class A  vs.  Trimegah Karya Pratama

Visa Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Trimegah Karya Pratama

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trimegah Karya Pratama are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Trimegah Karya disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Trimegah Karya

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

The idea behind Visa Class A and Trimegah Karya Pratama 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.