Correlation Between Apple and PT Indo

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

By analyzing existing cross correlation between Apple Inc and PT Indo Tambangraya, you can compare the effects of market volatilities on Apple and PT Indo 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 Apple with a short position of PT Indo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and PT Indo.

Diversification Opportunities for Apple and PT Indo

0.58

Correlation Coefficient

Apple  PT Indo

Very weak diversification

The 3 months correlation between Apple and 3IB is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and PT Indo Tambangraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Tambangraya and Apple 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 Apple Inc are associated (or correlated) with PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Tambangraya has no effect on the direction of Apple i.e., Apple and PT Indo go up and down completely randomly.

Pair Corralation between Apple and PT Indo

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.36 times more return on investment than PT Indo. However, Apple Inc is 2.77 times less risky than PT Indo. It trades about 0.4 of its potential returns per unit of risk. PT Indo Tambangraya is currently generating about 0.07 per unit of risk. If you would invest  20,386  in Apple Inc on October 6, 2024 and sell it today you would earn a total of  3,169  from holding Apple Inc or generate 15.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Apple Inc  vs.  PT Indo Tambangraya

Apple Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

PT Indo Tambangraya

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indo Tambangraya are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PT Indo is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and PT Indo

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

The idea behind Apple Inc and PT Indo Tambangraya 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.