Correlation Between Ever Shine and Indo Kordsa

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

By analyzing existing cross correlation between Ever Shine Textile and Indo Kordsa Tbk, you can compare the effects of market volatilities on Ever Shine and Indo Kordsa 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 Ever Shine with a short position of Indo Kordsa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ever Shine and Indo Kordsa.

Diversification Opportunities for Ever Shine and Indo Kordsa

0.31

Correlation Coefficient

Ever Shine  Indo Kordsa

Weak diversification

The 3 months correlation between Ever and Indo is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ever Shine Textile and Indo Kordsa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Kordsa Tbk and Ever Shine 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 Ever Shine Textile are associated (or correlated) with Indo Kordsa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Kordsa Tbk has no effect on the direction of Ever Shine i.e., Ever Shine and Indo Kordsa go up and down completely randomly.

Pair Corralation between Ever Shine and Indo Kordsa

Assuming the 90 days trading horizon Ever Shine Textile is expected to generate 1.63 times more return on investment than Indo Kordsa. However, Ever Shine is 1.63 times more volatile than Indo Kordsa Tbk. It trades about 0.09 of its potential returns per unit of risk. Indo Kordsa Tbk is currently generating about 0.05 per unit of risk. If you would invest  3,700  in Ever Shine Textile on September 3, 2024 and sell it today you would earn a total of  700.00  from holding Ever Shine Textile or generate 18.92% return on investment over 90 days.

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

Ever Shine Textile  vs.  Indo Kordsa Tbk

Ever Shine Textile

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ever Shine Textile are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Ever Shine disclosed solid returns over the last few months and may actually be approaching a breakup point.

Indo Kordsa Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Indo Kordsa Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Indo Kordsa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ever Shine and Indo Kordsa

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

The idea behind Ever Shine Textile and Indo Kordsa 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..