Correlation Between Tanah Laut and Intraco Penta

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Can any of the company-specific risk be diversified away by investing in both Tanah Laut and Intraco Penta 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 Tanah Laut and Intraco Penta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tanah Laut Tbk and Intraco Penta Tbk, you can compare the effects of market volatilities on Tanah Laut and Intraco Penta 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 Tanah Laut with a short position of Intraco Penta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tanah Laut and Intraco Penta.

Diversification Opportunities for Tanah Laut and Intraco Penta

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Tanah and Intraco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tanah Laut Tbk and Intraco Penta Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intraco Penta Tbk and Tanah Laut 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 Tanah Laut Tbk are associated (or correlated) with Intraco Penta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intraco Penta Tbk has no effect on the direction of Tanah Laut i.e., Tanah Laut and Intraco Penta go up and down completely randomly.

Pair Corralation between Tanah Laut and Intraco Penta

Assuming the 90 days trading horizon Tanah Laut is expected to generate 20.88 times less return on investment than Intraco Penta. But when comparing it to its historical volatility, Tanah Laut Tbk is 2.57 times less risky than Intraco Penta. It trades about 0.01 of its potential returns per unit of risk. Intraco Penta Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Intraco Penta Tbk on August 30, 2024 and sell it today you would earn a total of  300.00  from holding Intraco Penta Tbk or generate 37.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Tanah Laut Tbk  vs.  Intraco Penta Tbk

 Performance 
       Timeline  
Tanah Laut Tbk 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tanah Laut Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Intraco Penta Tbk 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Intraco Penta Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tanah Laut and Intraco Penta Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tanah Laut and Intraco Penta

The main advantage of trading using opposite Tanah Laut and Intraco Penta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tanah Laut position performs unexpectedly, Intraco Penta 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 Intraco Penta will offset losses from the drop in Intraco Penta's long position.
The idea behind Tanah Laut Tbk and Intraco Penta Tbk 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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