Correlation Between Alumindo Light and Intikeramik Alamasri

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

Diversification Opportunities for Alumindo Light and Intikeramik Alamasri

0.57

Correlation Coefficient

Alumindo Light  Intikeramik Alamasri

Very weak diversification

The 3 months correlation between Alumindo and Intikeramik is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alumindo Light Metal and Intikeramik Alamasri Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intikeramik Alamasri 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 Intikeramik Alamasri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intikeramik Alamasri has no effect on the direction of Alumindo Light i.e., Alumindo Light and Intikeramik Alamasri go up and down completely randomly.

Pair Corralation between Alumindo Light and Intikeramik Alamasri

Assuming the 90 days trading horizon Alumindo Light Metal is expected to generate 0.61 times more return on investment than Intikeramik Alamasri. However, Alumindo Light Metal is 1.64 times less risky than Intikeramik Alamasri. It trades about 0.09 of its potential returns per unit of risk. Intikeramik Alamasri Industri is currently generating about 0.03 per unit of risk. If you would invest  5,800  in Alumindo Light Metal on September 5, 2024 and sell it today you would earn a total of  1,600  from holding Alumindo Light Metal or generate 27.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.82%
Values	Daily Returns

Alumindo Light Metal  vs.  Intikeramik Alamasri Industri

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Intikeramik Alamasri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intikeramik Alamasri Industri 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Alumindo Light and Intikeramik Alamasri

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

The idea behind Alumindo Light Metal and Intikeramik Alamasri Industri 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.