Correlation Between Vale Indonesia and Timah Persero
Can any of the company-specific risk be diversified away by investing in both Vale Indonesia and Timah Persero 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 Vale Indonesia and Timah Persero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale Indonesia Tbk and Timah Persero Tbk, you can compare the effects of market volatilities on Vale Indonesia and Timah Persero 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 Vale Indonesia with a short position of Timah Persero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale Indonesia and Timah Persero.
Diversification Opportunities for Vale Indonesia and Timah Persero
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vale and Timah is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vale Indonesia Tbk and Timah Persero Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timah Persero Tbk and Vale Indonesia 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 Vale Indonesia Tbk are associated (or correlated) with Timah Persero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timah Persero Tbk has no effect on the direction of Vale Indonesia i.e., Vale Indonesia and Timah Persero go up and down completely randomly.
Pair Corralation between Vale Indonesia and Timah Persero
Assuming the 90 days trading horizon Vale Indonesia Tbk is expected to under-perform the Timah Persero. But the stock apears to be less risky and, when comparing its historical volatility, Vale Indonesia Tbk is 1.4 times less risky than Timah Persero. The stock trades about -0.06 of its potential returns per unit of risk. The Timah Persero Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 109,444 in Timah Persero Tbk on August 28, 2024 and sell it today you would earn a total of 11,056 from holding Timah Persero Tbk or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale Indonesia Tbk vs. Timah Persero Tbk
Performance |
| Timeline |
| Vale Indonesia Tbk |
| Timah Persero Tbk |
Vale Indonesia and Timah Persero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale Indonesia and Timah Persero
The main advantage of trading using opposite Vale Indonesia and Timah Persero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale Indonesia position performs unexpectedly, Timah Persero 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 Timah Persero will offset losses from the drop in Timah Persero's long position.| Vale Indonesia vs. Kedaung Indah Can | Vale Indonesia vs. Langgeng Makmur Industri | Vale Indonesia vs. Kabelindo Murni Tbk | Vale Indonesia vs. Mustika Ratu Tbk |
| Timah Persero vs. Vale Indonesia Tbk | Timah Persero vs. Aneka Tambang Persero | Timah Persero vs. Bukit Asam Tbk | Timah Persero vs. Perusahaan Gas Negara |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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