Correlation Between Timah Persero and Tunas Baru
Can any of the company-specific risk be diversified away by investing in both Timah Persero and Tunas Baru 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 Tunas Baru 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 Tunas Baru Lampung, you can compare the effects of market volatilities on Timah Persero and Tunas Baru 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 Tunas Baru. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timah Persero and Tunas Baru.
Diversification Opportunities for Timah Persero and Tunas Baru
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Timah and Tunas is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Timah Persero Tbk and Tunas Baru Lampung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tunas Baru Lampung 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 Tunas Baru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tunas Baru Lampung has no effect on the direction of Timah Persero i.e., Timah Persero and Tunas Baru go up and down completely randomly.
Pair Corralation between Timah Persero and Tunas Baru
Assuming the 90 days trading horizon Timah Persero Tbk is expected to under-perform the Tunas Baru. In addition to that, Timah Persero is 3.58 times more volatile than Tunas Baru Lampung. It trades about -0.17 of its total potential returns per unit of risk. Tunas Baru Lampung is currently generating about -0.15 per unit of volatility. If you would invest 65,550 in Tunas Baru Lampung on August 31, 2024 and sell it today you would lose (2,550) from holding Tunas Baru Lampung or give up 3.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timah Persero Tbk vs. Tunas Baru Lampung
Performance |
| Timeline |
| Timah Persero Tbk |
| Tunas Baru Lampung |
Timah Persero and Tunas Baru Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timah Persero and Tunas Baru
The main advantage of trading using opposite Timah Persero and Tunas Baru positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timah Persero position performs unexpectedly, Tunas Baru 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 Tunas Baru will offset losses from the drop in Tunas Baru'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 |
| Tunas Baru vs. Bakrie Sumatera Plantations | Tunas Baru vs. Sampoerna Agro Tbk | Tunas Baru vs. Perusahaan Perkebunan London | Tunas Baru vs. Timah Persero 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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