Correlation Between Asia Pacific and Indo Kordsa

Can any of the company-specific risk be diversified away by investing in both Asia Pacific and Indo Kordsa 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 Asia Pacific and Indo Kordsa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Pacific Investama and Indo Kordsa Tbk, you can compare the effects of market volatilities on Asia Pacific and Indo Kordsa 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 Asia Pacific with a short position of Indo Kordsa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Pacific and Indo Kordsa.

Diversification Opportunities for Asia Pacific and Indo Kordsa

0.2

Correlation Coefficient

Asia Pacific  Indo Kordsa

Modest diversification

The 3 months correlation between Asia and Indo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Asia Pacific Investama and Indo Kordsa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Kordsa Tbk and Asia Pacific 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 Asia Pacific Investama are associated (or correlated) with Indo Kordsa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Kordsa Tbk has no effect on the direction of Asia Pacific i.e., Asia Pacific and Indo Kordsa go up and down completely randomly.

Pair Corralation between Asia Pacific and Indo Kordsa

Assuming the 90 days trading horizon Asia Pacific Investama is expected to under-perform the Indo Kordsa. In addition to that, Asia Pacific is 1.07 times more volatile than Indo Kordsa Tbk. It trades about -0.14 of its total potential returns per unit of risk. Indo Kordsa Tbk is currently generating about 0.0 per unit of volatility. If you would invest  586,385  in Indo Kordsa Tbk on October 25, 2024 and sell it today you would lose (13,885) from holding Indo Kordsa Tbk or give up 2.37% of portfolio value over 90 days.

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

Asia Pacific Investama  vs.  Indo Kordsa Tbk

Asia Pacific Investama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Pacific Investama 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.

Indo Kordsa Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indo Kordsa Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Indo Kordsa 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 Asia Pacific and Indo Kordsa

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

The idea behind Asia Pacific Investama and Indo Kordsa 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.