Correlation Between COSTCO WHOLESALE and ADHI KARYA

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

By analyzing existing cross correlation between COSTCO WHOLESALE CDR and ADHI KARYA, you can compare the effects of market volatilities on COSTCO WHOLESALE and ADHI KARYA 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 COSTCO WHOLESALE with a short position of ADHI KARYA. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and ADHI KARYA.

Diversification Opportunities for COSTCO WHOLESALE and ADHI KARYA

-0.47

Correlation Coefficient

COSTCO WHOLESALE  ADHI KARYA

Very good diversification

The 3 months correlation between COSTCO and ADHI is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and ADHI KARYA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADHI KARYA and COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR are associated (or correlated) with ADHI KARYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADHI KARYA has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and ADHI KARYA go up and down completely randomly.

Pair Corralation between COSTCO WHOLESALE and ADHI KARYA

Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.38 times more return on investment than ADHI KARYA. However, COSTCO WHOLESALE CDR is 2.62 times less risky than ADHI KARYA. It trades about 0.07 of its potential returns per unit of risk. ADHI KARYA is currently generating about -0.01 per unit of risk. If you would invest  2,161  in COSTCO WHOLESALE CDR on October 10, 2024 and sell it today you would earn a total of  639.00  from holding COSTCO WHOLESALE CDR or generate 29.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

COSTCO WHOLESALE CDR  vs.  ADHI KARYA

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COSTCO WHOLESALE CDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COSTCO WHOLESALE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ADHI KARYA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADHI KARYA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with COSTCO WHOLESALE and ADHI KARYA

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

The idea behind COSTCO WHOLESALE CDR and ADHI KARYA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.