Correlation Between Adhi Karya and Indofarma Tbk

Can any of the company-specific risk be diversified away by investing in both Adhi Karya and Indofarma Tbk 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 Adhi Karya and Indofarma Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adhi Karya Persero and Indofarma Tbk, you can compare the effects of market volatilities on Adhi Karya and Indofarma Tbk 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 Adhi Karya with a short position of Indofarma Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adhi Karya and Indofarma Tbk.

Diversification Opportunities for Adhi Karya and Indofarma Tbk

0.0

Correlation Coefficient

Adhi Karya  Indofarma Tbk

Pay attention - limited upside

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

Pair Corralation between Adhi Karya and Indofarma Tbk

If you would invest  21,200  in Adhi Karya Persero on December 30, 2024 and sell it today you would earn a total of  2,800  from holding Adhi Karya Persero or generate 13.21% return on investment over 90 days.

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

Adhi Karya Persero  vs.  Indofarma Tbk

Adhi Karya Persero

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adhi Karya Persero are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Adhi Karya disclosed solid returns over the last few months and may actually be approaching a breakup point.

Indofarma Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indofarma Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Indofarma Tbk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Adhi Karya and Indofarma Tbk

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

The idea behind Adhi Karya Persero and Indofarma Tbk 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.