Correlation Between Alakasa Industrindo and Ateliers Mecaniques

Can any of the company-specific risk be diversified away by investing in both Alakasa Industrindo and Ateliers Mecaniques 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 Alakasa Industrindo and Ateliers Mecaniques into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alakasa Industrindo Tbk and Ateliers Mecaniques DIndonesie, you can compare the effects of market volatilities on Alakasa Industrindo and Ateliers Mecaniques 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 Alakasa Industrindo with a short position of Ateliers Mecaniques. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alakasa Industrindo and Ateliers Mecaniques.

Diversification Opportunities for Alakasa Industrindo and Ateliers Mecaniques

0.7

Correlation Coefficient

Alakasa Industrindo  Ateliers Mecaniques

Poor diversification

The 3 months correlation between Alakasa and Ateliers is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Alakasa Industrindo Tbk and Ateliers Mecaniques DIndonesie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ateliers Mecaniques and Alakasa Industrindo 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 Alakasa Industrindo Tbk are associated (or correlated) with Ateliers Mecaniques. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ateliers Mecaniques has no effect on the direction of Alakasa Industrindo i.e., Alakasa Industrindo and Ateliers Mecaniques go up and down completely randomly.

Pair Corralation between Alakasa Industrindo and Ateliers Mecaniques

Assuming the 90 days trading horizon Alakasa Industrindo is expected to generate 1.07 times less return on investment than Ateliers Mecaniques. In addition to that, Alakasa Industrindo is 1.68 times more volatile than Ateliers Mecaniques DIndonesie. It trades about 0.02 of its total potential returns per unit of risk. Ateliers Mecaniques DIndonesie is currently generating about 0.04 per unit of volatility. If you would invest  9,635  in Ateliers Mecaniques DIndonesie on December 4, 2024 and sell it today you would earn a total of  3,665  from holding Ateliers Mecaniques DIndonesie or generate 38.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Alakasa Industrindo Tbk  vs.  Ateliers Mecaniques DIndonesie

Alakasa Industrindo Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alakasa Industrindo 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ateliers Mecaniques

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ateliers Mecaniques DIndonesie has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Ateliers Mecaniques 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 Alakasa Industrindo and Ateliers Mecaniques

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

The idea behind Alakasa Industrindo Tbk and Ateliers Mecaniques DIndonesie 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.