Correlation Between PT Indonesia and Kabelindo Murni

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

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

Diversification Opportunities for PT Indonesia and Kabelindo Murni

-0.15

Correlation Coefficient

PT Indonesia  Kabelindo Murni

Good diversification

The 3 months correlation between IPCC and Kabelindo is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding PT Indonesia Kendaraan 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 PT Indonesia 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 PT Indonesia Kendaraan 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 PT Indonesia i.e., PT Indonesia and Kabelindo Murni go up and down completely randomly.

Pair Corralation between PT Indonesia and Kabelindo Murni

Assuming the 90 days trading horizon PT Indonesia Kendaraan is expected to under-perform the Kabelindo Murni. But the stock apears to be less risky and, when comparing its historical volatility, PT Indonesia Kendaraan is 1.02 times less risky than Kabelindo Murni. The stock trades about -0.07 of its potential returns per unit of risk. The Kabelindo Murni Tbk is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  28,400  in Kabelindo Murni Tbk on December 4, 2024 and sell it today you would lose (800.00) from holding Kabelindo Murni Tbk or give up 2.82% of portfolio value over 90 days.

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

PT Indonesia Kendaraan  vs.  Kabelindo Murni Tbk

PT Indonesia Kendaraan

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Indonesia Kendaraan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Indonesia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the 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 quite persistent forward-looking signals, Kabelindo Murni is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PT Indonesia and Kabelindo Murni

The main advantage of trading using opposite PT Indonesia and Kabelindo Murni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indonesia 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 PT Indonesia Kendaraan 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.