Correlation Between INDO RAMA and ZIJIN MINH

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

By analyzing existing cross correlation between INDO RAMA SYNTHETIC and ZIJIN MINH UNSPADR20, you can compare the effects of market volatilities on INDO RAMA and ZIJIN MINH 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 INDO RAMA with a short position of ZIJIN MINH. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDO RAMA and ZIJIN MINH.

Diversification Opportunities for INDO RAMA and ZIJIN MINH

0.0

Correlation Coefficient

INDO RAMA  ZIJIN MINH

Pay attention - limited upside

The 3 months correlation between INDO and ZIJIN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding INDO RAMA SYNTHETIC and ZIJIN MINH UNSPADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIJIN MINH UNSPADR20 and INDO RAMA 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 INDO RAMA SYNTHETIC are associated (or correlated) with ZIJIN MINH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIJIN MINH UNSPADR20 has no effect on the direction of INDO RAMA i.e., INDO RAMA and ZIJIN MINH go up and down completely randomly.

Pair Corralation between INDO RAMA and ZIJIN MINH

Assuming the 90 days trading horizon INDO RAMA SYNTHETIC is expected to under-perform the ZIJIN MINH. In addition to that, INDO RAMA is 1.1 times more volatile than ZIJIN MINH UNSPADR20. It trades about -0.02 of its total potential returns per unit of risk. ZIJIN MINH UNSPADR20 is currently generating about 0.04 per unit of volatility. If you would invest  2,345  in ZIJIN MINH UNSPADR20 on October 4, 2024 and sell it today you would earn a total of  915.00  from holding ZIJIN MINH UNSPADR20 or generate 39.02% return on investment over 90 days.

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

INDO RAMA SYNTHETIC  vs.  ZIJIN MINH UNSPADR20

INDO RAMA SYNTHETIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDO RAMA SYNTHETIC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, INDO RAMA is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ZIJIN MINH UNSPADR20

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZIJIN MINH UNSPADR20 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 INDO RAMA and ZIJIN MINH

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

The idea behind INDO RAMA SYNTHETIC and ZIJIN MINH UNSPADR20 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.