Correlation Between Reliance Securities and Trust Finance
Can any of the company-specific risk be diversified away by investing in both Reliance Securities and Trust Finance 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 Reliance Securities and Trust Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reliance Securities Tbk and Trust Finance Indonesia, you can compare the effects of market volatilities on Reliance Securities and Trust Finance 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 Reliance Securities with a short position of Trust Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reliance Securities and Trust Finance.
Diversification Opportunities for Reliance Securities and Trust Finance
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reliance and Trust is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Securities Tbk and Trust Finance Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trust Finance Indonesia and Reliance Securities 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 Reliance Securities Tbk are associated (or correlated) with Trust Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trust Finance Indonesia has no effect on the direction of Reliance Securities i.e., Reliance Securities and Trust Finance go up and down completely randomly.
Pair Corralation between Reliance Securities and Trust Finance
Assuming the 90 days trading horizon Reliance Securities is expected to generate 3.12 times less return on investment than Trust Finance. But when comparing it to its historical volatility, Reliance Securities Tbk is 1.04 times less risky than Trust Finance. It trades about 0.02 of its potential returns per unit of risk. Trust Finance Indonesia is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 43,600 in Trust Finance Indonesia on November 19, 2024 and sell it today you would earn a total of 63,900 from holding Trust Finance Indonesia or generate 146.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Reliance Securities Tbk vs. Trust Finance Indonesia
Performance |
| Timeline |
| Reliance Securities Tbk |
| Trust Finance Indonesia |
Reliance Securities and Trust Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reliance Securities and Trust Finance
The main advantage of trading using opposite Reliance Securities and Trust Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Securities position performs unexpectedly, Trust Finance 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 Trust Finance will offset losses from the drop in Trust Finance's long position.| Reliance Securities vs. Panca Global Securities | Reliance Securities vs. Panin Sekuritas Tbk | Reliance Securities vs. Trimegah Securities Tbk | Reliance Securities vs. Yulie Sekurindo Tbk |
| Trust Finance vs. Wahana Ottomitra Multiartha | Trust Finance vs. Yulie Sekurindo Tbk | Trust Finance vs. Trimegah Securities Tbk | Trust Finance vs. Mandala Multifinance Tbk |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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