Correlation Between Alumindo Light and Grand Kartech

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

Diversification Opportunities for Alumindo Light and Grand Kartech

0.0

Correlation Coefficient

Alumindo Light  Grand Kartech

Pay attention - limited upside

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

Pair Corralation between Alumindo Light and Grand Kartech

If you would invest  7,500  in Alumindo Light Metal on September 15, 2024 and sell it today you would lose (100.00) from holding Alumindo Light Metal or give up 1.33% of portfolio value over 90 days.

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

Alumindo Light Metal  vs.  Grand Kartech Tbk

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 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.

Grand Kartech Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Kartech Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Grand Kartech 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 Alumindo Light and Grand Kartech

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

The idea behind Alumindo Light Metal and Grand Kartech Tbk 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.