Correlation Between Fortune Indonesia and Akbar Indomakmur

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

By analyzing existing cross correlation between Fortune Indonesia Tbk and Akbar Indomakmur Stimec, you can compare the effects of market volatilities on Fortune Indonesia and Akbar Indomakmur 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 Fortune Indonesia with a short position of Akbar Indomakmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Indonesia and Akbar Indomakmur.

Diversification Opportunities for Fortune Indonesia and Akbar Indomakmur

-0.16

Correlation Coefficient

Fortune Indonesia  Akbar Indomakmur

Good diversification

The 3 months correlation between Fortune and Akbar is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Indonesia Tbk and Akbar Indomakmur Stimec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akbar Indomakmur Stimec and Fortune Indonesia 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 Fortune Indonesia Tbk are associated (or correlated) with Akbar Indomakmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akbar Indomakmur Stimec has no effect on the direction of Fortune Indonesia i.e., Fortune Indonesia and Akbar Indomakmur go up and down completely randomly.

Pair Corralation between Fortune Indonesia and Akbar Indomakmur

Assuming the 90 days trading horizon Fortune Indonesia Tbk is expected to generate 2.22 times more return on investment than Akbar Indomakmur. However, Fortune Indonesia is 2.22 times more volatile than Akbar Indomakmur Stimec. It trades about 0.06 of its potential returns per unit of risk. Akbar Indomakmur Stimec is currently generating about -0.03 per unit of risk. If you would invest  400,000  in Fortune Indonesia Tbk on September 12, 2024 and sell it today you would earn a total of  38,000  from holding Fortune Indonesia Tbk or generate 9.5% return on investment over 90 days.

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

Fortune Indonesia Tbk  vs.  Akbar Indomakmur Stimec

Fortune Indonesia Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Indonesia Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Fortune Indonesia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Akbar Indomakmur Stimec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akbar Indomakmur Stimec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Fortune Indonesia and Akbar Indomakmur

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

The idea behind Fortune Indonesia Tbk and Akbar Indomakmur Stimec 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.