Correlation Between Transcoal Pacific and Guna Timur
Can any of the company-specific risk be diversified away by investing in both Transcoal Pacific and Guna Timur 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 Transcoal Pacific and Guna Timur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transcoal Pacific Tbk and Guna Timur Raya, you can compare the effects of market volatilities on Transcoal Pacific and Guna Timur 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 Transcoal Pacific with a short position of Guna Timur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcoal Pacific and Guna Timur.
Diversification Opportunities for Transcoal Pacific and Guna Timur
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Transcoal and Guna is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Transcoal Pacific Tbk and Guna Timur Raya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guna Timur Raya and Transcoal Pacific 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 Transcoal Pacific Tbk are associated (or correlated) with Guna Timur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guna Timur Raya has no effect on the direction of Transcoal Pacific i.e., Transcoal Pacific and Guna Timur go up and down completely randomly.
Pair Corralation between Transcoal Pacific and Guna Timur
Assuming the 90 days trading horizon Transcoal Pacific Tbk is expected to under-perform the Guna Timur. But the stock apears to be less risky and, when comparing its historical volatility, Transcoal Pacific Tbk is 1.34 times less risky than Guna Timur. The stock trades about -0.01 of its potential returns per unit of risk. The Guna Timur Raya is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 11,000 in Guna Timur Raya on August 28, 2024 and sell it today you would lose (1,700) from holding Guna Timur Raya or give up 15.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transcoal Pacific Tbk vs. Guna Timur Raya
Performance |
| Timeline |
| Transcoal Pacific Tbk |
| Guna Timur Raya |
Transcoal Pacific and Guna Timur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transcoal Pacific and Guna Timur
The main advantage of trading using opposite Transcoal Pacific and Guna Timur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcoal Pacific position performs unexpectedly, Guna Timur 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 Guna Timur will offset losses from the drop in Guna Timur's long position.The idea behind Transcoal Pacific Tbk and Guna Timur Raya 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.| Guna Timur vs. Sinergi Inti Plastindo | Guna Timur vs. Hartadinata Abadi Tbk | Guna Timur vs. Weha Transportasi Indonesia |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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