Correlation Between Trimble and Bukit Asam

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

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

Diversification Opportunities for Trimble and Bukit Asam

0.79

Correlation Coefficient

Trimble  Bukit Asam

Poor diversification

The 3 months correlation between Trimble and Bukit is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Trimble and Bukit Asam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Asam Tbk and Trimble 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 Trimble are associated (or correlated) with Bukit Asam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Asam Tbk has no effect on the direction of Trimble i.e., Trimble and Bukit Asam go up and down completely randomly.

Pair Corralation between Trimble and Bukit Asam

Given the investment horizon of 90 days Trimble is expected to generate 0.98 times more return on investment than Bukit Asam. However, Trimble is 1.02 times less risky than Bukit Asam. It trades about -0.07 of its potential returns per unit of risk. Bukit Asam Tbk is currently generating about -0.23 per unit of risk. If you would invest  6,209  in Trimble on July 30, 2024 and sell it today you would lose (119.00) from holding Trimble or give up 1.92% of portfolio value over 90 days.

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

Trimble  vs.  Bukit Asam Tbk

Trimble

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trimble are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal primary indicators, Trimble may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Bukit Asam Tbk

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bukit Asam Tbk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Bukit Asam may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Trimble and Bukit Asam

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

The idea behind Trimble and Bukit Asam 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.