Correlation Between PT Indo and DFDS A/S

Can any of the company-specific risk be diversified away by investing in both PT Indo and DFDS A/S 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 DFDS A/S 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 DFDS AS, you can compare the effects of market volatilities on PT Indo and DFDS A/S 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 DFDS A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indo and DFDS A/S.

Diversification Opportunities for PT Indo and DFDS A/S

-0.24

Correlation Coefficient

PT Indo  DFDS A/S

Very good diversification

The 3 months correlation between 3IB and DFDS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PT Indo Tambangraya and DFDS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFDS A/S 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 DFDS A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFDS A/S has no effect on the direction of PT Indo i.e., PT Indo and DFDS A/S go up and down completely randomly.

Pair Corralation between PT Indo and DFDS A/S

Assuming the 90 days trading horizon PT Indo Tambangraya is expected to generate 1.77 times more return on investment than DFDS A/S. However, PT Indo is 1.77 times more volatile than DFDS AS. It trades about 0.0 of its potential returns per unit of risk. DFDS AS is currently generating about -0.02 per unit of risk. If you would invest  218.00  in PT Indo Tambangraya on October 4, 2024 and sell it today you would lose (66.00) from holding PT Indo Tambangraya or give up 30.28% of portfolio value over 90 days.

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

PT Indo Tambangraya  vs.  DFDS AS

PT Indo Tambangraya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indo Tambangraya has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PT Indo is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

DFDS A/S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DFDS AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PT Indo and DFDS A/S

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

The idea behind PT Indo Tambangraya and DFDS AS 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.