Correlation Between Alumindo Light and Cipta Selera

Can any of the company-specific risk be diversified away by investing in both Alumindo Light and Cipta Selera 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 Alumindo Light and Cipta Selera into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alumindo Light Metal and Cipta Selera Murni, you can compare the effects of market volatilities on Alumindo Light and Cipta Selera 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 Alumindo Light with a short position of Cipta Selera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumindo Light and Cipta Selera.

Diversification Opportunities for Alumindo Light and Cipta Selera

0.17

Correlation Coefficient

Alumindo Light  Cipta Selera

Average diversification

The 3 months correlation between Alumindo and Cipta is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alumindo Light Metal and Cipta Selera Murni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipta Selera Murni and Alumindo Light 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 Alumindo Light Metal are associated (or correlated) with Cipta Selera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipta Selera Murni has no effect on the direction of Alumindo Light i.e., Alumindo Light and Cipta Selera go up and down completely randomly.

Pair Corralation between Alumindo Light and Cipta Selera

If you would invest  302,000  in Cipta Selera Murni on October 26, 2024 and sell it today you would earn a total of  21,000  from holding Cipta Selera Murni or generate 6.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Alumindo Light Metal  vs.  Cipta Selera Murni

Alumindo Light Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alumindo Light Metal 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.

Cipta Selera Murni

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cipta Selera Murni are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Cipta Selera disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alumindo Light and Cipta Selera

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

The idea behind Alumindo Light Metal and Cipta Selera Murni 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.