Correlation Between Timah Persero and Champion Pacific
Can any of the company-specific risk be diversified away by investing in both Timah Persero and Champion Pacific 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 Timah Persero and Champion Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timah Persero Tbk and Champion Pacific Indonesia, you can compare the effects of market volatilities on Timah Persero and Champion Pacific 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 Timah Persero with a short position of Champion Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timah Persero and Champion Pacific.
Diversification Opportunities for Timah Persero and Champion Pacific
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Timah and Champion is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Timah Persero Tbk and Champion Pacific Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Pacific Ind and Timah Persero 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 Timah Persero Tbk are associated (or correlated) with Champion Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Pacific Ind has no effect on the direction of Timah Persero i.e., Timah Persero and Champion Pacific go up and down completely randomly.
Pair Corralation between Timah Persero and Champion Pacific
Assuming the 90 days trading horizon Timah Persero Tbk is expected to under-perform the Champion Pacific. In addition to that, Timah Persero is 1.99 times more volatile than Champion Pacific Indonesia. It trades about -0.29 of its total potential returns per unit of risk. Champion Pacific Indonesia is currently generating about 0.01 per unit of volatility. If you would invest 50,000 in Champion Pacific Indonesia on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Champion Pacific Indonesia or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timah Persero Tbk vs. Champion Pacific Indonesia
Performance |
| Timeline |
| Timah Persero Tbk |
| Champion Pacific Ind |
Timah Persero and Champion Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timah Persero and Champion Pacific
The main advantage of trading using opposite Timah Persero and Champion Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timah Persero position performs unexpectedly, Champion Pacific 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 Champion Pacific will offset losses from the drop in Champion Pacific's long position.| Timah Persero vs. Vale Indonesia Tbk | Timah Persero vs. Aneka Tambang Persero | Timah Persero vs. Bukit Asam Tbk | Timah Persero vs. Perusahaan Gas Negara |
| Champion Pacific vs. Intanwijaya Internasional Tbk | Champion Pacific vs. Asiaplast Industries Tbk | Champion Pacific vs. Trias Sentosa Tbk | Champion Pacific vs. Lotte Chemical Titan |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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