Correlation Between Indospring Tbk and Akbar Indomakmur

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

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

Diversification Opportunities for Indospring Tbk and Akbar Indomakmur

0.21

Correlation Coefficient

Indospring Tbk  Akbar Indomakmur

Modest diversification

The 3 months correlation between Indospring and Akbar is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Indospring 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 Indospring Tbk 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 Indospring 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 Indospring Tbk i.e., Indospring Tbk and Akbar Indomakmur go up and down completely randomly.

Pair Corralation between Indospring Tbk and Akbar Indomakmur

Assuming the 90 days trading horizon Indospring Tbk is expected to under-perform the Akbar Indomakmur. But the stock apears to be less risky and, when comparing its historical volatility, Indospring Tbk is 2.93 times less risky than Akbar Indomakmur. The stock trades about -0.07 of its potential returns per unit of risk. The Akbar Indomakmur Stimec is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  36,600  in Akbar Indomakmur Stimec on December 23, 2024 and sell it today you would lose (2,400) from holding Akbar Indomakmur Stimec or give up 6.56% of portfolio value over 90 days.

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

Indospring Tbk  vs.  Akbar Indomakmur Stimec

Indospring Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indospring Tbk 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.

Akbar Indomakmur Stimec

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Akbar Indomakmur Stimec are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Akbar Indomakmur may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Indospring Tbk and Akbar Indomakmur

The main advantage of trading using opposite Indospring Tbk and Akbar Indomakmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indospring Tbk 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 Indospring 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.