Correlation Between Indospring Tbk and Rig Tenders

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

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

Diversification Opportunities for Indospring Tbk and Rig Tenders

-0.69

Correlation Coefficient

Indospring Tbk  Rig Tenders

Excellent diversification

The 3 months correlation between Indospring and Rig is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Indospring Tbk and Rig Tenders Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rig Tenders 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 Rig Tenders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rig Tenders Tbk has no effect on the direction of Indospring Tbk i.e., Indospring Tbk and Rig Tenders go up and down completely randomly.

Pair Corralation between Indospring Tbk and Rig Tenders

Assuming the 90 days trading horizon Indospring Tbk is expected to under-perform the Rig Tenders. But the stock apears to be less risky and, when comparing its historical volatility, Indospring Tbk is 4.09 times less risky than Rig Tenders. The stock trades about -0.23 of its potential returns per unit of risk. The Rig Tenders Tbk is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  60,500  in Rig Tenders Tbk on October 24, 2024 and sell it today you would earn a total of  12,500  from holding Rig Tenders Tbk or generate 20.66% return on investment over 90 days.

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

Indospring Tbk  vs.  Rig Tenders Tbk

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 weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Rig Tenders Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rig Tenders Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Rig Tenders disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indospring Tbk and Rig Tenders

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

The idea behind Indospring Tbk and Rig Tenders 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.