Correlation Between Royalindo Investa and Trimegah Securities
Can any of the company-specific risk be diversified away by investing in both Royalindo Investa and Trimegah Securities 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 Royalindo Investa and Trimegah Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royalindo Investa Wijaya and Trimegah Securities Tbk, you can compare the effects of market volatilities on Royalindo Investa and Trimegah Securities 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 Royalindo Investa with a short position of Trimegah Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalindo Investa and Trimegah Securities.
Diversification Opportunities for Royalindo Investa and Trimegah Securities
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Royalindo and Trimegah is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Royalindo Investa Wijaya and Trimegah Securities Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimegah Securities Tbk and Royalindo Investa 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 Royalindo Investa Wijaya are associated (or correlated) with Trimegah Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimegah Securities Tbk has no effect on the direction of Royalindo Investa i.e., Royalindo Investa and Trimegah Securities go up and down completely randomly.
Pair Corralation between Royalindo Investa and Trimegah Securities
Assuming the 90 days trading horizon Royalindo Investa is expected to generate 4.47 times less return on investment than Trimegah Securities. But when comparing it to its historical volatility, Royalindo Investa Wijaya is 1.17 times less risky than Trimegah Securities. It trades about 0.02 of its potential returns per unit of risk. Trimegah Securities Tbk is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 18,800 in Trimegah Securities Tbk on August 27, 2024 and sell it today you would earn a total of 17,400 from holding Trimegah Securities Tbk or generate 92.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Royalindo Investa Wijaya vs. Trimegah Securities Tbk
Performance |
| Timeline |
| Royalindo Investa Wijaya |
| Trimegah Securities Tbk |
Royalindo Investa and Trimegah Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royalindo Investa and Trimegah Securities
The main advantage of trading using opposite Royalindo Investa and Trimegah Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royalindo Investa position performs unexpectedly, Trimegah Securities 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 Securities will offset losses from the drop in Trimegah Securities' long position.| Royalindo Investa vs. Jasa Armada Indonesia | Royalindo Investa vs. Cahayaputra Asa Keramik | Royalindo Investa vs. Campina Ice Cream |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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