Correlation Between Intikeramik Alamasri and Cemindo Gemilang

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

By analyzing existing cross correlation between Intikeramik Alamasri Industri and Cemindo Gemilang Tbk, you can compare the effects of market volatilities on Intikeramik Alamasri and Cemindo Gemilang 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 Intikeramik Alamasri with a short position of Cemindo Gemilang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intikeramik Alamasri and Cemindo Gemilang.

Diversification Opportunities for Intikeramik Alamasri and Cemindo Gemilang

0.81

Correlation Coefficient

Intikeramik Alamasri  Cemindo Gemilang

Very poor diversification

The 3 months correlation between Intikeramik and Cemindo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Intikeramik Alamasri Industri and Cemindo Gemilang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemindo Gemilang Tbk and Intikeramik Alamasri 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 Intikeramik Alamasri Industri are associated (or correlated) with Cemindo Gemilang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemindo Gemilang Tbk has no effect on the direction of Intikeramik Alamasri i.e., Intikeramik Alamasri and Cemindo Gemilang go up and down completely randomly.

Pair Corralation between Intikeramik Alamasri and Cemindo Gemilang

Assuming the 90 days trading horizon Intikeramik Alamasri Industri is expected to under-perform the Cemindo Gemilang. In addition to that, Intikeramik Alamasri is 3.11 times more volatile than Cemindo Gemilang Tbk. It trades about -0.07 of its total potential returns per unit of risk. Cemindo Gemilang Tbk is currently generating about -0.03 per unit of volatility. If you would invest  102,000  in Cemindo Gemilang Tbk on September 1, 2024 and sell it today you would lose (5,500) from holding Cemindo Gemilang Tbk or give up 5.39% of portfolio value over 90 days.

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

Intikeramik Alamasri Industri  vs.  Cemindo Gemilang Tbk

Intikeramik Alamasri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intikeramik Alamasri Industri 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Cemindo Gemilang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Intikeramik Alamasri and Cemindo Gemilang

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

The idea behind Intikeramik Alamasri Industri and Cemindo Gemilang 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.