Correlation Between Trias Sentosa and Sinar Mas
Can any of the company-specific risk be diversified away by investing in both Trias Sentosa and Sinar Mas 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 Trias Sentosa and Sinar Mas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trias Sentosa Tbk and Sinar Mas Multiartha, you can compare the effects of market volatilities on Trias Sentosa and Sinar Mas 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 Trias Sentosa with a short position of Sinar Mas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trias Sentosa and Sinar Mas.
Diversification Opportunities for Trias Sentosa and Sinar Mas
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Trias and Sinar is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Trias Sentosa Tbk and Sinar Mas Multiartha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinar Mas Multiartha and Trias Sentosa 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 Trias Sentosa Tbk are associated (or correlated) with Sinar Mas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinar Mas Multiartha has no effect on the direction of Trias Sentosa i.e., Trias Sentosa and Sinar Mas go up and down completely randomly.
Pair Corralation between Trias Sentosa and Sinar Mas
Assuming the 90 days trading horizon Trias Sentosa Tbk is expected to generate 1.4 times more return on investment than Sinar Mas. However, Trias Sentosa is 1.4 times more volatile than Sinar Mas Multiartha. It trades about 0.02 of its potential returns per unit of risk. Sinar Mas Multiartha is currently generating about 0.02 per unit of risk. If you would invest 48,800 in Trias Sentosa Tbk on December 11, 2024 and sell it today you would earn a total of 1,200 from holding Trias Sentosa Tbk or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trias Sentosa Tbk vs. Sinar Mas Multiartha
Performance |
| Timeline |
| Trias Sentosa Tbk |
| Sinar Mas Multiartha |
Trias Sentosa and Sinar Mas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trias Sentosa and Sinar Mas
The main advantage of trading using opposite Trias Sentosa and Sinar Mas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trias Sentosa position performs unexpectedly, Sinar Mas 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 Sinar Mas will offset losses from the drop in Sinar Mas' long position.| Trias Sentosa vs. Argha Karya Prima | ||
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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