Correlation Between Indosat Tbk and Cisadane Sawit

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

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

Diversification Opportunities for Indosat Tbk and Cisadane Sawit

-0.39

Correlation Coefficient

Indosat Tbk  Cisadane Sawit

Very good diversification

The 3 months correlation between Indosat and Cisadane is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Cisadane Sawit Raya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisadane Sawit Raya and Indosat 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 Indosat Tbk are associated (or correlated) with Cisadane Sawit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisadane Sawit Raya has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Cisadane Sawit go up and down completely randomly.

Pair Corralation between Indosat Tbk and Cisadane Sawit

Assuming the 90 days trading horizon Indosat Tbk is expected to under-perform the Cisadane Sawit. In addition to that, Indosat Tbk is 1.65 times more volatile than Cisadane Sawit Raya. It trades about -0.08 of its total potential returns per unit of risk. Cisadane Sawit Raya is currently generating about -0.05 per unit of volatility. If you would invest  73,000  in Cisadane Sawit Raya on October 7, 2024 and sell it today you would lose (1,000.00) from holding Cisadane Sawit Raya or give up 1.37% of portfolio value over 90 days.

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

Indosat Tbk  vs.  Cisadane Sawit Raya

Indosat Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indosat 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.

Cisadane Sawit Raya

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cisadane Sawit Raya are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Cisadane Sawit disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indosat Tbk and Cisadane Sawit

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

The idea behind Indosat Tbk and Cisadane Sawit Raya 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .