Correlation Between Alumindo Light and PT Data

Can any of the company-specific risk be diversified away by investing in both Alumindo Light and PT Data 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 PT Data 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 PT Data Sinergitama, you can compare the effects of market volatilities on Alumindo Light and PT Data 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 PT Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumindo Light and PT Data.

Diversification Opportunities for Alumindo Light and PT Data

0.0

Correlation Coefficient

Alumindo Light  PT Data

Pay attention - limited upside

The 3 months correlation between Alumindo and ELIT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alumindo Light Metal and PT Data Sinergitama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Data Sinergitama 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 PT Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Data Sinergitama has no effect on the direction of Alumindo Light i.e., Alumindo Light and PT Data go up and down completely randomly.

Pair Corralation between Alumindo Light and PT Data

If you would invest  11,800  in PT Data Sinergitama on December 30, 2024 and sell it today you would earn a total of  5,900  from holding PT Data Sinergitama or generate 50.0% return on investment over 90 days.

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

Alumindo Light Metal  vs.  PT Data Sinergitama

Alumindo Light Metal

Risk-Adjusted Performance

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 quite persistent forward-looking signals, Alumindo Light is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PT Data Sinergitama

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Data Sinergitama are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Data disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alumindo Light and PT Data

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

The idea behind Alumindo Light Metal and PT Data Sinergitama 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.