Correlation Between PT Indo and Varta AG

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

Diversification Opportunities for PT Indo and Varta AG

0.0

Correlation Coefficient

PT Indo  Varta AG

Pay attention - limited upside

The 3 months correlation between 3IB and Varta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Indo Tambangraya and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG 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 Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of PT Indo i.e., PT Indo and Varta AG go up and down completely randomly.

Pair Corralation between PT Indo and Varta AG

If you would invest  142.00  in Varta AG on October 4, 2024 and sell it today you would earn a total of  12.00  from holding Varta AG or generate 8.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

PT Indo Tambangraya  vs.  Varta AG

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Varta AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Varta AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Varta AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indo and Varta AG

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

The idea behind PT Indo Tambangraya and Varta AG 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.