Correlation Between Akbar Indomakmur and Argha Karya

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

By analyzing existing cross correlation between Akbar Indomakmur Stimec and Argha Karya Prima, you can compare the effects of market volatilities on Akbar Indomakmur and Argha Karya 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 Akbar Indomakmur with a short position of Argha Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akbar Indomakmur and Argha Karya.

Diversification Opportunities for Akbar Indomakmur and Argha Karya

0.69

Correlation Coefficient

Akbar Indomakmur  Argha Karya

Poor diversification

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

Pair Corralation between Akbar Indomakmur and Argha Karya

Assuming the 90 days trading horizon Akbar Indomakmur Stimec is expected to generate 1.03 times more return on investment than Argha Karya. However, Akbar Indomakmur is 1.03 times more volatile than Argha Karya Prima. It trades about -0.03 of its potential returns per unit of risk. Argha Karya Prima is currently generating about -0.04 per unit of risk. If you would invest  49,200  in Akbar Indomakmur Stimec on September 12, 2024 and sell it today you would lose (6,200) from holding Akbar Indomakmur Stimec or give up 12.6% of portfolio value over 90 days.

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

Akbar Indomakmur Stimec  vs.  Argha Karya Prima

Akbar Indomakmur Stimec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akbar Indomakmur Stimec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Argha Karya Prima

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argha Karya Prima has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Akbar Indomakmur and Argha Karya

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

The idea behind Akbar Indomakmur Stimec and Argha Karya Prima 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.