Correlation Between Argha Karya and Alumindo Light
Can any of the company-specific risk be diversified away by investing in both Argha Karya and Alumindo Light 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 Argha Karya and Alumindo Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argha Karya Prima and Alumindo Light Metal, you can compare the effects of market volatilities on Argha Karya and Alumindo Light 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 Argha Karya with a short position of Alumindo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argha Karya and Alumindo Light.
Diversification Opportunities for Argha Karya and Alumindo Light
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Argha and Alumindo is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Argha Karya Prima and Alumindo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumindo Light Metal and Argha Karya 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 Argha Karya Prima are associated (or correlated) with Alumindo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumindo Light Metal has no effect on the direction of Argha Karya i.e., Argha Karya and Alumindo Light go up and down completely randomly.
Pair Corralation between Argha Karya and Alumindo Light
Assuming the 90 days trading horizon Argha Karya Prima is expected to generate 0.7 times more return on investment than Alumindo Light. However, Argha Karya Prima is 1.43 times less risky than Alumindo Light. It trades about -0.04 of its potential returns per unit of risk. Alumindo Light Metal is currently generating about -0.05 per unit of risk. If you would invest 122,476 in Argha Karya Prima on October 25, 2024 and sell it today you would lose (62,476) from holding Argha Karya Prima or give up 51.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Argha Karya Prima vs. Alumindo Light Metal
Performance |
| Timeline |
| Argha Karya Prima |
| Alumindo Light Metal |
Argha Karya and Alumindo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argha Karya and Alumindo Light
The main advantage of trading using opposite Argha Karya and Alumindo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argha Karya position performs unexpectedly, Alumindo Light 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 Alumindo Light will offset losses from the drop in Alumindo Light's long position.| Argha Karya vs. Asiaplast Industries Tbk | Argha Karya vs. Alumindo Light Metal | Argha Karya vs. Berlina Tbk | Argha Karya vs. Anugerah Kagum Karya |
| Alumindo Light vs. Asiaplast Industries Tbk | Alumindo Light vs. Argha Karya Prima | Alumindo Light vs. Indal Aluminium Industry | Alumindo Light vs. Alakasa Industrindo Tbk |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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