Correlation Between Surya Toto and Transcoal Pacific
Can any of the company-specific risk be diversified away by investing in both Surya Toto and Transcoal 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 Surya Toto and Transcoal Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Surya Toto Indonesia and Transcoal Pacific Tbk, you can compare the effects of market volatilities on Surya Toto and Transcoal 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 Surya Toto with a short position of Transcoal Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surya Toto and Transcoal Pacific.
Diversification Opportunities for Surya Toto and Transcoal Pacific
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Surya and Transcoal is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Surya Toto Indonesia and Transcoal Pacific Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcoal Pacific Tbk and Surya Toto 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 Surya Toto Indonesia are associated (or correlated) with Transcoal Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcoal Pacific Tbk has no effect on the direction of Surya Toto i.e., Surya Toto and Transcoal Pacific go up and down completely randomly.
Pair Corralation between Surya Toto and Transcoal Pacific
Assuming the 90 days trading horizon Surya Toto Indonesia is expected to generate 0.56 times more return on investment than Transcoal Pacific. However, Surya Toto Indonesia is 1.8 times less risky than Transcoal Pacific. It trades about 0.17 of its potential returns per unit of risk. Transcoal Pacific Tbk is currently generating about -0.02 per unit of risk. If you would invest 20,692 in Surya Toto Indonesia on September 13, 2024 and sell it today you would earn a total of 1,708 from holding Surya Toto Indonesia or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Surya Toto Indonesia vs. Transcoal Pacific Tbk
Performance |
| Timeline |
| Surya Toto Indonesia |
| Transcoal Pacific Tbk |
Surya Toto and Transcoal Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Surya Toto and Transcoal Pacific
The main advantage of trading using opposite Surya Toto and Transcoal Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surya Toto position performs unexpectedly, Transcoal 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 Transcoal Pacific will offset losses from the drop in Transcoal Pacific's long position.| Surya Toto vs. Unggul Indah Cahaya | Surya Toto vs. Tembaga Mulia Semanan | Surya Toto vs. PT Mulia Industrindo | Surya Toto vs. Trias Sentosa Tbk |
| Transcoal Pacific vs. PT Indonesia Kendaraan | Transcoal Pacific vs. Surya Toto Indonesia | Transcoal Pacific vs. Mitra Pinasthika Mustika | Transcoal Pacific vs. Integra Indocabinet 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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