Correlation Between Indosat Tbk and Indal Aluminium
Can any of the company-specific risk be diversified away by investing in both Indosat Tbk and Indal Aluminium 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 Indal Aluminium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosat Tbk and Indal Aluminium Industry, you can compare the effects of market volatilities on Indosat Tbk and Indal Aluminium 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 Indal Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosat Tbk and Indal Aluminium.
Diversification Opportunities for Indosat Tbk and Indal Aluminium
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Indosat and Indal is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Indal Aluminium Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indal Aluminium Industry 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 Indal Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indal Aluminium Industry has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Indal Aluminium go up and down completely randomly.
Pair Corralation between Indosat Tbk and Indal Aluminium
Assuming the 90 days trading horizon Indosat Tbk is expected to under-perform the Indal Aluminium. But the stock apears to be less risky and, when comparing its historical volatility, Indosat Tbk is 2.24 times less risky than Indal Aluminium. The stock trades about -0.21 of its potential returns per unit of risk. The Indal Aluminium Industry is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13,100 in Indal Aluminium Industry on December 2, 2024 and sell it today you would earn a total of 7,100 from holding Indal Aluminium Industry or generate 54.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Indosat Tbk vs. Indal Aluminium Industry
Performance |
Timeline |
Indosat Tbk |
Indal Aluminium Industry |
Indosat Tbk and Indal Aluminium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Indosat Tbk and Indal Aluminium
The main advantage of trading using opposite Indosat Tbk and Indal Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosat Tbk position performs unexpectedly, Indal Aluminium 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 Indal Aluminium will offset losses from the drop in Indal Aluminium's long position.Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
Indal Aluminium vs. Intanwijaya Internasional Tbk | Indal Aluminium vs. Alumindo Light Metal | Indal Aluminium vs. Champion Pacific Indonesia | Indal Aluminium vs. Betonjaya Manunggal Tbk |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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