Correlation Between Kino Indonesia and PT Estee

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

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

Diversification Opportunities for Kino Indonesia and PT Estee

0.67

Correlation Coefficient

Kino Indonesia  PT Estee

Poor diversification

The 3 months correlation between Kino and EURO is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kino Indonesia Tbk and PT Estee Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Estee Gold and Kino 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 Kino Indonesia Tbk are associated (or correlated) with PT Estee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Estee Gold has no effect on the direction of Kino Indonesia i.e., Kino Indonesia and PT Estee go up and down completely randomly.

Pair Corralation between Kino Indonesia and PT Estee

Assuming the 90 days trading horizon Kino Indonesia Tbk is expected to generate 0.29 times more return on investment than PT Estee. However, Kino Indonesia Tbk is 3.42 times less risky than PT Estee. It trades about -0.03 of its potential returns per unit of risk. PT Estee Gold is currently generating about -0.01 per unit of risk. If you would invest  155,991  in Kino Indonesia Tbk on October 21, 2024 and sell it today you would lose (34,991) from holding Kino Indonesia Tbk or give up 22.43% of portfolio value over 90 days.

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

Kino Indonesia Tbk  vs.  PT Estee Gold

Kino Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kino Indonesia 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.

PT Estee Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Estee Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting 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.

Pair Trading with Kino Indonesia and PT Estee

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

The idea behind Kino Indonesia Tbk and PT Estee Gold 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.