Correlation Between Polychem Indonesia and PT Kusuma
Can any of the company-specific risk be diversified away by investing in both Polychem Indonesia and PT Kusuma 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 Polychem Indonesia and PT Kusuma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polychem Indonesia Tbk and PT Kusuma Kemindo, you can compare the effects of market volatilities on Polychem Indonesia and PT Kusuma 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 Polychem Indonesia with a short position of PT Kusuma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polychem Indonesia and PT Kusuma.
Diversification Opportunities for Polychem Indonesia and PT Kusuma
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Polychem and KKES is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Polychem Indonesia Tbk and PT Kusuma Kemindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Kusuma Kemindo and Polychem 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 Polychem Indonesia Tbk are associated (or correlated) with PT Kusuma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Kusuma Kemindo has no effect on the direction of Polychem Indonesia i.e., Polychem Indonesia and PT Kusuma go up and down completely randomly.
Pair Corralation between Polychem Indonesia and PT Kusuma
Assuming the 90 days trading horizon Polychem Indonesia Tbk is expected to generate 1.11 times more return on investment than PT Kusuma. However, Polychem Indonesia is 1.11 times more volatile than PT Kusuma Kemindo. It trades about -0.14 of its potential returns per unit of risk. PT Kusuma Kemindo is currently generating about -0.47 per unit of risk. If you would invest 12,700 in Polychem Indonesia Tbk on September 2, 2024 and sell it today you would lose (700.00) from holding Polychem Indonesia Tbk or give up 5.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polychem Indonesia Tbk vs. PT Kusuma Kemindo
Performance |
| Timeline |
| Polychem Indonesia Tbk |
| PT Kusuma Kemindo |
Polychem Indonesia and PT Kusuma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polychem Indonesia and PT Kusuma
The main advantage of trading using opposite Polychem Indonesia and PT Kusuma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polychem Indonesia position performs unexpectedly, PT Kusuma 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 Kusuma will offset losses from the drop in PT Kusuma's long position.| Polychem Indonesia vs. Perusahaan Gas Negara | Polychem Indonesia vs. Telkom Indonesia Tbk | Polychem Indonesia vs. Mitra Pinasthika Mustika | Polychem Indonesia vs. Jakarta Int Hotels |
| PT Kusuma vs. PT Hetzer Medical | PT Kusuma vs. Bangun Karya Perkasa | PT Kusuma vs. PT Dewi Shri | PT Kusuma vs. PT Sari Kreasi |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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