Correlation Between PT Indo and Alaska Air

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

Diversification Opportunities for PT Indo and Alaska Air

0.41

Correlation Coefficient

PT Indo  Alaska Air

Very weak diversification

The 3 months correlation between 3IB and Alaska is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PT Indo Tambangraya and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of PT Indo i.e., PT Indo and Alaska Air go up and down completely randomly.

Pair Corralation between PT Indo and Alaska Air

Assuming the 90 days trading horizon PT Indo Tambangraya is expected to under-perform the Alaska Air. In addition to that, PT Indo is 1.18 times more volatile than Alaska Air Group. It trades about -0.15 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.24 per unit of volatility. If you would invest  5,822  in Alaska Air Group on October 11, 2024 and sell it today you would earn a total of  516.00  from holding Alaska Air Group or generate 8.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

PT Indo Tambangraya  vs.  Alaska Air Group

PT Indo Tambangraya

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indo Tambangraya are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PT Indo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Alaska Air Group

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alaska Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indo and Alaska Air

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

The idea behind PT Indo Tambangraya and Alaska Air Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.