Correlation Between Eterindo Wahanatama and Indal Aluminium

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

By analyzing existing cross correlation between Eterindo Wahanatama Tbk and Indal Aluminium Industry, you can compare the effects of market volatilities on Eterindo Wahanatama and Indal Aluminium 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 Eterindo Wahanatama with a short position of Indal Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eterindo Wahanatama and Indal Aluminium.

Diversification Opportunities for Eterindo Wahanatama and Indal Aluminium

0.0

Correlation Coefficient

Eterindo Wahanatama  Indal Aluminium

Pay attention - limited upside

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

Pair Corralation between Eterindo Wahanatama and Indal Aluminium

If you would invest  7,000  in Eterindo Wahanatama Tbk on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Eterindo Wahanatama Tbk or generate 0.0% return on investment over 90 days.

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

Eterindo Wahanatama Tbk  vs.  Indal Aluminium Industry

Eterindo Wahanatama Tbk

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Eterindo Wahanatama Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Eterindo Wahanatama is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Indal Aluminium Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indal Aluminium Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Eterindo Wahanatama and Indal Aluminium

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

The idea behind Eterindo Wahanatama Tbk and Indal Aluminium Industry 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.