Correlation Between Indal Aluminium and Intikeramik Alamasri

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

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

Diversification Opportunities for Indal Aluminium and Intikeramik Alamasri

0.43

Correlation Coefficient

Indal Aluminium  Intikeramik Alamasri

Very weak diversification

The 3 months correlation between Indal and Intikeramik is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Indal Aluminium Industry and Intikeramik Alamasri Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intikeramik Alamasri and Indal Aluminium 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 Indal Aluminium Industry are associated (or correlated) with Intikeramik Alamasri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intikeramik Alamasri has no effect on the direction of Indal Aluminium i.e., Indal Aluminium and Intikeramik Alamasri go up and down completely randomly.

Pair Corralation between Indal Aluminium and Intikeramik Alamasri

Assuming the 90 days trading horizon Indal Aluminium Industry is expected to under-perform the Intikeramik Alamasri. But the stock apears to be less risky and, when comparing its historical volatility, Indal Aluminium Industry is 2.4 times less risky than Intikeramik Alamasri. The stock trades about -0.07 of its potential returns per unit of risk. The Intikeramik Alamasri Industri is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  700.00  in Intikeramik Alamasri Industri on September 5, 2024 and sell it today you would earn a total of  300.00  from holding Intikeramik Alamasri Industri or generate 42.86% return on investment over 90 days.

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

Indal Aluminium Industry  vs.  Intikeramik Alamasri Industri

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 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.

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Indal Aluminium and Intikeramik Alamasri

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

The idea behind Indal Aluminium Industry and Intikeramik Alamasri Industri 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.