Correlation Between Alumindo Light and PT Winner

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

Diversification Opportunities for Alumindo Light and PT Winner

0.08

Correlation Coefficient

Alumindo Light  PT Winner

Significant diversification

The 3 months correlation between Alumindo and WINR is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Alumindo Light Metal and PT Winner Nusantara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Winner Nusantara 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 Winner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Winner Nusantara has no effect on the direction of Alumindo Light i.e., Alumindo Light and PT Winner go up and down completely randomly.

Pair Corralation between Alumindo Light and PT Winner

If you would invest  1,400  in PT Winner Nusantara on October 25, 2024 and sell it today you would earn a total of  400.00  from holding PT Winner Nusantara or generate 28.57% 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.  PT Winner Nusantara

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.

PT Winner Nusantara

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Winner Nusantara are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Winner disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alumindo Light and PT Winner

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

The idea behind Alumindo Light Metal and PT Winner Nusantara 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.