Correlation Between Kmi Wire and Samindo Resources

Can any of the company-specific risk be diversified away by investing in both Kmi Wire and Samindo Resources 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 Kmi Wire and Samindo Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kmi Wire And and Samindo Resources Tbk, you can compare the effects of market volatilities on Kmi Wire and Samindo Resources 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 Kmi Wire with a short position of Samindo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kmi Wire and Samindo Resources.

Diversification Opportunities for Kmi Wire and Samindo Resources

-0.36

Correlation Coefficient

Kmi Wire  Samindo Resources

Very good diversification

The 3 months correlation between Kmi and Samindo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kmi Wire And and Samindo Resources Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samindo Resources Tbk and Kmi Wire 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 Kmi Wire And are associated (or correlated) with Samindo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samindo Resources Tbk has no effect on the direction of Kmi Wire i.e., Kmi Wire and Samindo Resources go up and down completely randomly.

Pair Corralation between Kmi Wire and Samindo Resources

Assuming the 90 days trading horizon Kmi Wire is expected to generate 9.45 times less return on investment than Samindo Resources. But when comparing it to its historical volatility, Kmi Wire And is 1.74 times less risky than Samindo Resources. It trades about 0.02 of its potential returns per unit of risk. Samindo Resources Tbk is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  160,000  in Samindo Resources Tbk on December 4, 2024 and sell it today you would earn a total of  25,000  from holding Samindo Resources Tbk or generate 15.63% return on investment over 90 days.

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

Kmi Wire And  vs.  Samindo Resources Tbk

Kmi Wire And

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kmi Wire And are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kmi Wire is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Samindo Resources Tbk

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samindo Resources Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Samindo Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kmi Wire and Samindo Resources

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

The idea behind Kmi Wire And and Samindo Resources 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.