Correlation Between Indosterling Technomedia and Tirta Mahakam
Can any of the company-specific risk be diversified away by investing in both Indosterling Technomedia and Tirta Mahakam 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 Indosterling Technomedia and Tirta Mahakam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosterling Technomedia Tbk and Tirta Mahakam Resources, you can compare the effects of market volatilities on Indosterling Technomedia and Tirta Mahakam 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 Indosterling Technomedia with a short position of Tirta Mahakam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosterling Technomedia and Tirta Mahakam.
Diversification Opportunities for Indosterling Technomedia and Tirta Mahakam
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Indosterling and Tirta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indosterling Technomedia Tbk and Tirta Mahakam Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tirta Mahakam Resources and Indosterling Technomedia 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 Indosterling Technomedia Tbk are associated (or correlated) with Tirta Mahakam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tirta Mahakam Resources has no effect on the direction of Indosterling Technomedia i.e., Indosterling Technomedia and Tirta Mahakam go up and down completely randomly.
Pair Corralation between Indosterling Technomedia and Tirta Mahakam
If you would invest 2,400 in Tirta Mahakam Resources on September 6, 2024 and sell it today you would earn a total of 1,600 from holding Tirta Mahakam Resources or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indosterling Technomedia Tbk vs. Tirta Mahakam Resources
Performance |
| Timeline |
| Indosterling Technomedia |
| Tirta Mahakam Resources |
Indosterling Technomedia and Tirta Mahakam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosterling Technomedia and Tirta Mahakam
The main advantage of trading using opposite Indosterling Technomedia and Tirta Mahakam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosterling Technomedia position performs unexpectedly, Tirta Mahakam 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 Tirta Mahakam will offset losses from the drop in Tirta Mahakam's long position.The idea behind Indosterling Technomedia Tbk and Tirta Mahakam Resources 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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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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