Correlation Between CVW CLEANTECH and PT Indo

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

By analyzing existing cross correlation between CVW CLEANTECH INC and PT Indo Tambangraya, you can compare the effects of market volatilities on CVW CLEANTECH and PT Indo 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 CVW CLEANTECH with a short position of PT Indo. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CLEANTECH and PT Indo.

Diversification Opportunities for CVW CLEANTECH and PT Indo

0.77

Correlation Coefficient

CVW CLEANTECH  PT Indo

Poor diversification

The 3 months correlation between CVW and 3IB is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and PT Indo Tambangraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Tambangraya and CVW CLEANTECH 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 CVW CLEANTECH INC are associated (or correlated) with PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Tambangraya has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and PT Indo go up and down completely randomly.

Pair Corralation between CVW CLEANTECH and PT Indo

Assuming the 90 days trading horizon CVW CLEANTECH INC is expected to generate 1.37 times more return on investment than PT Indo. However, CVW CLEANTECH is 1.37 times more volatile than PT Indo Tambangraya. It trades about -0.04 of its potential returns per unit of risk. PT Indo Tambangraya is currently generating about -0.13 per unit of risk. If you would invest  56.00  in CVW CLEANTECH INC on December 19, 2024 and sell it today you would lose (7.00) from holding CVW CLEANTECH INC or give up 12.5% of portfolio value over 90 days.

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

CVW CLEANTECH INC  vs.  PT Indo Tambangraya

CVW CLEANTECH INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVW CLEANTECH INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PT Indo Tambangraya

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Indo Tambangraya has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CVW CLEANTECH and PT Indo

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

The idea behind CVW CLEANTECH INC and PT Indo Tambangraya 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.