Correlation Between Alumindo Light and PT Citra
Can any of the company-specific risk be diversified away by investing in both Alumindo Light and PT Citra 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 Alumindo Light and PT Citra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alumindo Light Metal and PT Citra Tubindo, you can compare the effects of market volatilities on Alumindo Light and PT Citra 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 Alumindo Light with a short position of PT Citra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumindo Light and PT Citra.
Diversification Opportunities for Alumindo Light and PT Citra
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alumindo and CTBN is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alumindo Light Metal and PT Citra Tubindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Citra Tubindo and Alumindo Light 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 Alumindo Light Metal are associated (or correlated) with PT Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Citra Tubindo has no effect on the direction of Alumindo Light i.e., Alumindo Light and PT Citra go up and down completely randomly.
Pair Corralation between Alumindo Light and PT Citra
Assuming the 90 days trading horizon Alumindo Light is expected to generate 4.05 times less return on investment than PT Citra. But when comparing it to its historical volatility, Alumindo Light Metal is 1.37 times less risky than PT Citra. It trades about 0.03 of its potential returns per unit of risk. PT Citra Tubindo is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 220,000 in PT Citra Tubindo on August 30, 2024 and sell it today you would earn a total of 40,000 from holding PT Citra Tubindo or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alumindo Light Metal vs. PT Citra Tubindo
Performance |
| Timeline |
| Alumindo Light Metal |
| PT Citra Tubindo |
Alumindo Light and PT Citra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alumindo Light and PT Citra
The main advantage of trading using opposite Alumindo Light and PT Citra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alumindo Light position performs unexpectedly, PT Citra 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 Citra will offset losses from the drop in PT Citra's long position.| Alumindo Light vs. Asiaplast Industries Tbk | Alumindo Light vs. Argha Karya Prima | Alumindo Light vs. Alakasa Industrindo Tbk |
| PT Citra vs. Betonjaya Manunggal Tbk | PT Citra vs. Duta Pertiwi Nusantara | PT Citra vs. Argha Karya Prima | PT Citra vs. Alumindo Light Metal |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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