Correlation Between Alakasa Industrindo and Cita Mineral
Can any of the company-specific risk be diversified away by investing in both Alakasa Industrindo and Cita Mineral 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 Alakasa Industrindo and Cita Mineral into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alakasa Industrindo Tbk and Cita Mineral Investindo, you can compare the effects of market volatilities on Alakasa Industrindo and Cita Mineral 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 Alakasa Industrindo with a short position of Cita Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alakasa Industrindo and Cita Mineral.
Diversification Opportunities for Alakasa Industrindo and Cita Mineral
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alakasa and Cita is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alakasa Industrindo Tbk and Cita Mineral Investindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cita Mineral Investindo and Alakasa Industrindo 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 Alakasa Industrindo Tbk are associated (or correlated) with Cita Mineral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cita Mineral Investindo has no effect on the direction of Alakasa Industrindo i.e., Alakasa Industrindo and Cita Mineral go up and down completely randomly.
Pair Corralation between Alakasa Industrindo and Cita Mineral
Assuming the 90 days trading horizon Alakasa Industrindo Tbk is expected to generate 2.12 times more return on investment than Cita Mineral. However, Alakasa Industrindo is 2.12 times more volatile than Cita Mineral Investindo. It trades about -0.07 of its potential returns per unit of risk. Cita Mineral Investindo is currently generating about -0.49 per unit of risk. If you would invest 36,200 in Alakasa Industrindo Tbk on October 26, 2024 and sell it today you would lose (1,600) from holding Alakasa Industrindo Tbk or give up 4.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alakasa Industrindo Tbk vs. Cita Mineral Investindo
Performance |
| Timeline |
| Alakasa Industrindo Tbk |
| Cita Mineral Investindo |
Alakasa Industrindo and Cita Mineral Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alakasa Industrindo and Cita Mineral
The main advantage of trading using opposite Alakasa Industrindo and Cita Mineral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alakasa Industrindo position performs unexpectedly, Cita Mineral 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 Cita Mineral will offset losses from the drop in Cita Mineral's long position.| Alakasa Industrindo vs. Argha Karya Prima | Alakasa Industrindo vs. Alumindo Light Metal | Alakasa Industrindo vs. Asiaplast Industries Tbk | Alakasa Industrindo vs. Akbar Indomakmur Stimec |
| Cita Mineral vs. Asiaplast Industries Tbk | Cita Mineral vs. Argha Karya Prima | Cita Mineral vs. Indal Aluminium Industry | Cita Mineral 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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