Correlation Between Alkindo Naratama and Kedaung Indah
Can any of the company-specific risk be diversified away by investing in both Alkindo Naratama and Kedaung Indah 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 Alkindo Naratama and Kedaung Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alkindo Naratama Tbk and Kedaung Indah Can, you can compare the effects of market volatilities on Alkindo Naratama and Kedaung Indah 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 Alkindo Naratama with a short position of Kedaung Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkindo Naratama and Kedaung Indah.
Diversification Opportunities for Alkindo Naratama and Kedaung Indah
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alkindo and Kedaung is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alkindo Naratama Tbk and Kedaung Indah Can in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kedaung Indah Can and Alkindo Naratama 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 Alkindo Naratama Tbk are associated (or correlated) with Kedaung Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kedaung Indah Can has no effect on the direction of Alkindo Naratama i.e., Alkindo Naratama and Kedaung Indah go up and down completely randomly.
Pair Corralation between Alkindo Naratama and Kedaung Indah
Assuming the 90 days trading horizon Alkindo Naratama Tbk is expected to generate 1.08 times more return on investment than Kedaung Indah. However, Alkindo Naratama is 1.08 times more volatile than Kedaung Indah Can. It trades about 0.25 of its potential returns per unit of risk. Kedaung Indah Can is currently generating about -0.09 per unit of risk. If you would invest 43,000 in Alkindo Naratama Tbk on August 28, 2024 and sell it today you would earn a total of 15,500 from holding Alkindo Naratama Tbk or generate 36.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alkindo Naratama Tbk vs. Kedaung Indah Can
Performance |
| Timeline |
| Alkindo Naratama Tbk |
| Kedaung Indah Can |
Alkindo Naratama and Kedaung Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alkindo Naratama and Kedaung Indah
The main advantage of trading using opposite Alkindo Naratama and Kedaung Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alkindo Naratama position performs unexpectedly, Kedaung Indah 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 Kedaung Indah will offset losses from the drop in Kedaung Indah's long position.| Alkindo Naratama vs. Kedaung Indah Can | Alkindo Naratama vs. Langgeng Makmur Industri | Alkindo Naratama vs. Kabelindo Murni Tbk | Alkindo Naratama vs. Mustika Ratu Tbk |
| Kedaung Indah vs. Langgeng Makmur Industri | Kedaung Indah vs. Kedawung Setia Industrial | Kedaung Indah vs. Mustika Ratu Tbk | Kedaung Indah vs. Kabelindo Murni 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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