Correlation Between Trust Finance and Integra Indocabinet

Can any of the company-specific risk be diversified away by investing in both Trust Finance and Integra Indocabinet 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 Trust Finance and Integra Indocabinet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trust Finance Indonesia and Integra Indocabinet Tbk, you can compare the effects of market volatilities on Trust Finance and Integra Indocabinet 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 Trust Finance with a short position of Integra Indocabinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trust Finance and Integra Indocabinet.

Diversification Opportunities for Trust Finance and Integra Indocabinet

0.0

Correlation Coefficient

Trust Finance  Integra Indocabinet

Pay attention - limited upside

The 3 months correlation between Trust and Integra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Trust Finance Indonesia and Integra Indocabinet Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra Indocabinet Tbk and Trust Finance 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 Trust Finance Indonesia are associated (or correlated) with Integra Indocabinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra Indocabinet Tbk has no effect on the direction of Trust Finance i.e., Trust Finance and Integra Indocabinet go up and down completely randomly.

Pair Corralation between Trust Finance and Integra Indocabinet

If you would invest  42,400  in Trust Finance Indonesia on March 21, 2024 and sell it today you would lose (1,200) from holding Trust Finance Indonesia or give up 2.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Trust Finance Indonesia  vs.  Integra Indocabinet Tbk

Trust Finance Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trust Finance Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Trust Finance is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Integra Indocabinet Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integra Indocabinet Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Trust Finance and Integra Indocabinet

The main advantage of trading using opposite Trust Finance and Integra Indocabinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trust Finance position performs unexpectedly, Integra Indocabinet 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 Integra Indocabinet will offset losses from the drop in Integra Indocabinet's long position.

The idea behind Trust Finance Indonesia and Integra Indocabinet Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.