Correlation Between Polychem Indonesia and Akasha Wira

Can any of the company-specific risk be diversified away by investing in both Polychem Indonesia and Akasha Wira 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 Polychem Indonesia and Akasha Wira into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Polychem Indonesia Tbk and Akasha Wira International, you can compare the effects of market volatilities on Polychem Indonesia and Akasha Wira 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 Polychem Indonesia with a short position of Akasha Wira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polychem Indonesia and Akasha Wira.

Diversification Opportunities for Polychem Indonesia and Akasha Wira

0.69

Correlation Coefficient

Polychem Indonesia  Akasha Wira

Poor diversification

The 3 months correlation between Polychem and Akasha is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Polychem Indonesia Tbk and Akasha Wira International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akasha Wira International and Polychem Indonesia 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 Polychem Indonesia Tbk are associated (or correlated) with Akasha Wira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akasha Wira International has no effect on the direction of Polychem Indonesia i.e., Polychem Indonesia and Akasha Wira go up and down completely randomly.

Pair Corralation between Polychem Indonesia and Akasha Wira

Assuming the 90 days trading horizon Polychem Indonesia Tbk is expected to under-perform the Akasha Wira. In addition to that, Polychem Indonesia is 1.01 times more volatile than Akasha Wira International. It trades about -0.16 of its total potential returns per unit of risk. Akasha Wira International is currently generating about -0.03 per unit of volatility. If you would invest  965,000  in Akasha Wira International on November 28, 2024 and sell it today you would lose (27,500) from holding Akasha Wira International or give up 2.85% of portfolio value over 90 days.

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

Polychem Indonesia Tbk  vs.  Akasha Wira International

Polychem Indonesia Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polychem Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Akasha Wira International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Akasha Wira International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Akasha Wira 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 Polychem Indonesia and Akasha Wira

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

The idea behind Polychem Indonesia Tbk and Akasha Wira International 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.