Correlation Between Indospring Tbk and Indomobil Sukses

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

By analyzing existing cross correlation between Indospring Tbk and Indomobil Sukses Internasional, you can compare the effects of market volatilities on Indospring Tbk and Indomobil Sukses 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 Indomobil Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indospring Tbk and Indomobil Sukses.

Diversification Opportunities for Indospring Tbk and Indomobil Sukses

0.91

Correlation Coefficient

Indospring Tbk  Indomobil Sukses

Almost no diversification

The 3 months correlation between Indospring and Indomobil is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Indospring Tbk and Indomobil Sukses Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indomobil Sukses Int 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 Indomobil Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indomobil Sukses Int has no effect on the direction of Indospring Tbk i.e., Indospring Tbk and Indomobil Sukses go up and down completely randomly.

Pair Corralation between Indospring Tbk and Indomobil Sukses

Assuming the 90 days trading horizon Indospring Tbk is expected to generate 0.69 times more return on investment than Indomobil Sukses. However, Indospring Tbk is 1.45 times less risky than Indomobil Sukses. It trades about -0.22 of its potential returns per unit of risk. Indomobil Sukses Internasional is currently generating about -0.23 per unit of risk. If you would invest  29,800  in Indospring Tbk on September 3, 2024 and sell it today you would lose (5,000) from holding Indospring Tbk or give up 16.78% of portfolio value over 90 days.

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

Indospring Tbk  vs.  Indomobil Sukses Internasional

Indospring Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indospring Tbk 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.

Indomobil Sukses Int

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indomobil Sukses Internasional 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 Indospring Tbk and Indomobil Sukses

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

The idea behind Indospring Tbk and Indomobil Sukses Internasional 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.