Correlation Between Alkindo Naratama and Betonjaya Manunggal
Can any of the company-specific risk be diversified away by investing in both Alkindo Naratama and Betonjaya Manunggal 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 Alkindo Naratama and Betonjaya Manunggal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alkindo Naratama Tbk and Betonjaya Manunggal Tbk, you can compare the effects of market volatilities on Alkindo Naratama and Betonjaya Manunggal 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 Alkindo Naratama with a short position of Betonjaya Manunggal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkindo Naratama and Betonjaya Manunggal.
Diversification Opportunities for Alkindo Naratama and Betonjaya Manunggal
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alkindo and Betonjaya is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alkindo Naratama Tbk and Betonjaya Manunggal Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betonjaya Manunggal Tbk and Alkindo Naratama 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 Alkindo Naratama Tbk are associated (or correlated) with Betonjaya Manunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betonjaya Manunggal Tbk has no effect on the direction of Alkindo Naratama i.e., Alkindo Naratama and Betonjaya Manunggal go up and down completely randomly.
Pair Corralation between Alkindo Naratama and Betonjaya Manunggal
Assuming the 90 days trading horizon Alkindo Naratama Tbk is expected to generate 0.8 times more return on investment than Betonjaya Manunggal. However, Alkindo Naratama Tbk is 1.26 times less risky than Betonjaya Manunggal. It trades about 0.16 of its potential returns per unit of risk. Betonjaya Manunggal Tbk is currently generating about 0.02 per unit of risk. If you would invest 40,800 in Alkindo Naratama Tbk on September 15, 2024 and sell it today you would earn a total of 13,200 from holding Alkindo Naratama Tbk or generate 32.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alkindo Naratama Tbk vs. Betonjaya Manunggal Tbk
Performance |
Timeline |
Alkindo Naratama Tbk |
Betonjaya Manunggal Tbk |
Alkindo Naratama and Betonjaya Manunggal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alkindo Naratama and Betonjaya Manunggal
The main advantage of trading using opposite Alkindo Naratama and Betonjaya Manunggal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alkindo Naratama position performs unexpectedly, Betonjaya Manunggal 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 Betonjaya Manunggal will offset losses from the drop in Betonjaya Manunggal's long position.Alkindo Naratama vs. Kedaung Indah Can | Alkindo Naratama vs. Kabelindo Murni Tbk | Alkindo Naratama vs. Champion Pacific Indonesia | Alkindo Naratama vs. Bhuwanatala Indah Permai |
Betonjaya Manunggal vs. Alumindo Light Metal | Betonjaya Manunggal vs. Berlina Tbk | Betonjaya Manunggal vs. Asiaplast Industries Tbk |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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