Correlation Between Tri Banyan and FKS Food

Can any of the company-specific risk be diversified away by investing in both Tri Banyan and FKS Food 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 Tri Banyan and FKS Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tri Banyan Tirta and FKS Food Sejahtera, you can compare the effects of market volatilities on Tri Banyan and FKS Food 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 Tri Banyan with a short position of FKS Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Banyan and FKS Food.

Diversification Opportunities for Tri Banyan and FKS Food

0.91

Correlation Coefficient

Tri Banyan  FKS Food

Almost no diversification

The 3 months correlation between Tri and FKS is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Tri Banyan Tirta and FKS Food Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FKS Food Sejahtera and Tri Banyan 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 Tri Banyan Tirta are associated (or correlated) with FKS Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FKS Food Sejahtera has no effect on the direction of Tri Banyan i.e., Tri Banyan and FKS Food go up and down completely randomly.

Pair Corralation between Tri Banyan and FKS Food

Assuming the 90 days trading horizon Tri Banyan Tirta is expected to under-perform the FKS Food. But the stock apears to be less risky and, when comparing its historical volatility, Tri Banyan Tirta is 1.02 times less risky than FKS Food. The stock trades about -0.22 of its potential returns per unit of risk. The FKS Food Sejahtera is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  15,500  in FKS Food Sejahtera on February 3, 2024 and sell it today you would lose (3,000) from holding FKS Food Sejahtera or give up 19.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Tri Banyan Tirta  vs.  FKS Food Sejahtera

Tri Banyan Tirta

Risk-Adjusted Performance

0 of 100

Very Weak

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

FKS Food Sejahtera

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tri Banyan and FKS Food

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

The idea behind Tri Banyan Tirta and FKS Food Sejahtera 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.