Correlation Between Tira Austenite and Indo Kordsa

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

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

Diversification Opportunities for Tira Austenite and Indo Kordsa

0.35

Correlation Coefficient

Tira Austenite  Indo Kordsa

Weak diversification

The 3 months correlation between Tira and Indo is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tira Austenite Tbk 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 Tira Austenite 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 Tira Austenite Tbk 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 Tira Austenite i.e., Tira Austenite and Indo Kordsa go up and down completely randomly.

Pair Corralation between Tira Austenite and Indo Kordsa

Assuming the 90 days trading horizon Tira Austenite Tbk is expected to generate 2.25 times more return on investment than Indo Kordsa. However, Tira Austenite is 2.25 times more volatile than Indo Kordsa Tbk. It trades about 0.15 of its potential returns per unit of risk. Indo Kordsa Tbk is currently generating about -0.07 per unit of risk. If you would invest  40,800  in Tira Austenite Tbk on October 24, 2024 and sell it today you would earn a total of  4,200  from holding Tira Austenite Tbk or generate 10.29% return on investment over 90 days.

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

Tira Austenite Tbk  vs.  Indo Kordsa Tbk

Tira Austenite Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tira Austenite Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tira Austenite disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 Tira Austenite and Indo Kordsa

The main advantage of trading using opposite Tira Austenite and Indo Kordsa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tira Austenite 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 Tira Austenite Tbk 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.