Correlation Between Victoria Insurance and Trimegah Karya

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

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

Diversification Opportunities for Victoria Insurance and Trimegah Karya

0.69

Correlation Coefficient

Victoria Insurance  Trimegah Karya

Poor diversification

The 3 months correlation between Victoria and Trimegah is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Victoria Insurance Tbk 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 Victoria Insurance 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 Victoria Insurance Tbk 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 Victoria Insurance i.e., Victoria Insurance and Trimegah Karya go up and down completely randomly.

Pair Corralation between Victoria Insurance and Trimegah Karya

Assuming the 90 days trading horizon Victoria Insurance Tbk is expected to under-perform the Trimegah Karya. But the stock apears to be less risky and, when comparing its historical volatility, Victoria Insurance Tbk is 2.28 times less risky than Trimegah Karya. The stock trades about -0.11 of its potential returns per unit of risk. The Trimegah Karya Pratama is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  7,100  in Trimegah Karya Pratama on September 13, 2024 and sell it today you would lose (600.00) from holding Trimegah Karya Pratama or give up 8.45% of portfolio value over 90 days.

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

Victoria Insurance Tbk  vs.  Trimegah Karya Pratama

Victoria Insurance Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victoria Insurance Tbk 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.

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 quite persistent forward-looking signals, Trimegah Karya 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 Victoria Insurance and Trimegah Karya

The main advantage of trading using opposite Victoria Insurance and Trimegah Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victoria Insurance 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 Victoria Insurance Tbk 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.