Correlation Between Verena Multi and Trust Finance
Can any of the company-specific risk be diversified away by investing in both Verena Multi and Trust Finance 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 Verena Multi and Trust Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verena Multi Finance and Trust Finance Indonesia, you can compare the effects of market volatilities on Verena Multi and Trust Finance 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 Verena Multi with a short position of Trust Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verena Multi and Trust Finance.
Diversification Opportunities for Verena Multi and Trust Finance
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Verena and Trust is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Verena Multi Finance and Trust Finance Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trust Finance Indonesia and Verena Multi 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 Verena Multi Finance are associated (or correlated) with Trust Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trust Finance Indonesia has no effect on the direction of Verena Multi i.e., Verena Multi and Trust Finance go up and down completely randomly.
Pair Corralation between Verena Multi and Trust Finance
Assuming the 90 days trading horizon Verena Multi Finance is expected to under-perform the Trust Finance. But the stock apears to be less risky and, when comparing its historical volatility, Verena Multi Finance is 1.17 times less risky than Trust Finance. The stock trades about -0.05 of its potential returns per unit of risk. The Trust Finance Indonesia is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 43,800 in Trust Finance Indonesia on August 30, 2024 and sell it today you would earn a total of 1,000.00 from holding Trust Finance Indonesia or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verena Multi Finance vs. Trust Finance Indonesia
Performance |
| Timeline |
| Verena Multi Finance |
| Trust Finance Indonesia |
Verena Multi and Trust Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verena Multi and Trust Finance
The main advantage of trading using opposite Verena Multi and Trust Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verena Multi position performs unexpectedly, Trust Finance 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 Trust Finance will offset losses from the drop in Trust Finance's long position.| Verena Multi vs. Bank Cimb Niaga | Verena Multi vs. Indosat Tbk | Verena Multi vs. Astra Agro Lestari | Verena Multi vs. Bank Mandiri Persero |
| Trust Finance vs. Wahana Ottomitra Multiartha | Trust Finance vs. Yulie Sekurindo Tbk | Trust Finance vs. Trimegah Securities Tbk | Trust Finance vs. Mandala Multifinance 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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