Correlation Between Indospring Tbk and Kabelindo Murni

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

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

Diversification Opportunities for Indospring Tbk and Kabelindo Murni

0.74

Correlation Coefficient

Indospring Tbk  Kabelindo Murni

Poor diversification

The 3 months correlation between Indospring and Kabelindo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Indospring Tbk and Kabelindo Murni Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kabelindo Murni Tbk 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 Kabelindo Murni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kabelindo Murni Tbk has no effect on the direction of Indospring Tbk i.e., Indospring Tbk and Kabelindo Murni go up and down completely randomly.

Pair Corralation between Indospring Tbk and Kabelindo Murni

Assuming the 90 days trading horizon Indospring Tbk is expected to generate 22.3 times more return on investment than Kabelindo Murni. However, Indospring Tbk is 22.3 times more volatile than Kabelindo Murni Tbk. It trades about 0.04 of its potential returns per unit of risk. Kabelindo Murni Tbk is currently generating about 0.02 per unit of risk. If you would invest  18,344  in Indospring Tbk on November 21, 2024 and sell it today you would earn a total of  4,456  from holding Indospring Tbk or generate 24.29% return on investment over 90 days.

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

Indospring Tbk  vs.  Kabelindo Murni Tbk

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 weak 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.

Kabelindo Murni Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kabelindo Murni 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.

Pair Trading with Indospring Tbk and Kabelindo Murni

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

The idea behind Indospring Tbk and Kabelindo Murni 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.