Correlation Between Akbar Indomakmur and Fortune Indonesia

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

Diversification Opportunities for Akbar Indomakmur and Fortune Indonesia

-0.16

Correlation Coefficient

Akbar Indomakmur  Fortune Indonesia

Good diversification

The 3 months correlation between Akbar and Fortune is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Akbar Indomakmur Stimec and Fortune Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Indonesia Tbk 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 Fortune Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Indonesia Tbk has no effect on the direction of Akbar Indomakmur i.e., Akbar Indomakmur and Fortune Indonesia go up and down completely randomly.

Pair Corralation between Akbar Indomakmur and Fortune Indonesia

Assuming the 90 days trading horizon Akbar Indomakmur Stimec is expected to under-perform the Fortune Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, Akbar Indomakmur Stimec is 2.22 times less risky than Fortune Indonesia. The stock trades about -0.03 of its potential returns per unit of risk. The Fortune Indonesia Tbk is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  400,000  in Fortune Indonesia Tbk on September 12, 2024 and sell it today you would earn a total of  38,000  from holding Fortune Indonesia Tbk or generate 9.5% return on investment over 90 days.

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

Akbar Indomakmur Stimec  vs.  Fortune Indonesia Tbk

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.

Fortune Indonesia Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Akbar Indomakmur and Fortune Indonesia

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

The idea behind Akbar Indomakmur Stimec and Fortune Indonesia 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.