Correlation Between PT Indo and UNIVMUSIC GRPADR/050

Can any of the company-specific risk be diversified away by investing in both PT Indo and UNIVMUSIC GRPADR/050 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 PT Indo and UNIVMUSIC GRPADR/050 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Indo Tambangraya and UNIVMUSIC GRPADR050, you can compare the effects of market volatilities on PT Indo and UNIVMUSIC GRPADR/050 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 PT Indo with a short position of UNIVMUSIC GRPADR/050. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indo and UNIVMUSIC GRPADR/050.

Diversification Opportunities for PT Indo and UNIVMUSIC GRPADR/050

-0.15

Correlation Coefficient

PT Indo  UNIVMUSIC GRPADR/050

Good diversification

The 3 months correlation between 3IB and UNIVMUSIC is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding PT Indo Tambangraya and UNIVMUSIC GRPADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVMUSIC GRPADR/050 and PT Indo 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 PT Indo Tambangraya are associated (or correlated) with UNIVMUSIC GRPADR/050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVMUSIC GRPADR/050 has no effect on the direction of PT Indo i.e., PT Indo and UNIVMUSIC GRPADR/050 go up and down completely randomly.

Pair Corralation between PT Indo and UNIVMUSIC GRPADR/050

Assuming the 90 days trading horizon PT Indo Tambangraya is expected to under-perform the UNIVMUSIC GRPADR/050. In addition to that, PT Indo is 1.82 times more volatile than UNIVMUSIC GRPADR050. It trades about -0.12 of its total potential returns per unit of risk. UNIVMUSIC GRPADR050 is currently generating about 0.16 per unit of volatility. If you would invest  1,150  in UNIVMUSIC GRPADR050 on October 8, 2024 and sell it today you would earn a total of  40.00  from holding UNIVMUSIC GRPADR050 or generate 3.48% return on investment over 90 days.

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

PT Indo Tambangraya  vs.  UNIVMUSIC GRPADR050

PT Indo Tambangraya

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indo Tambangraya are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PT Indo is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

UNIVMUSIC GRPADR/050

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVMUSIC GRPADR050 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, UNIVMUSIC GRPADR/050 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Indo and UNIVMUSIC GRPADR/050

The main advantage of trading using opposite PT Indo and UNIVMUSIC GRPADR/050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indo position performs unexpectedly, UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 will offset losses from the drop in UNIVMUSIC GRPADR/050's long position.

The idea behind PT Indo Tambangraya and UNIVMUSIC GRPADR050 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.