Correlation Between Alumindo Light and PT Primadaya
Can any of the company-specific risk be diversified away by investing in both Alumindo Light and PT Primadaya 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 Primadaya 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 Primadaya Plastisindo, you can compare the effects of market volatilities on Alumindo Light and PT Primadaya 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 Primadaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumindo Light and PT Primadaya.
Diversification Opportunities for Alumindo Light and PT Primadaya
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alumindo and PDPP is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Alumindo Light Metal and PT Primadaya Plastisindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Primadaya Plastisindo 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 Primadaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Primadaya Plastisindo has no effect on the direction of Alumindo Light i.e., Alumindo Light and PT Primadaya go up and down completely randomly.
Pair Corralation between Alumindo Light and PT Primadaya
Assuming the 90 days trading horizon Alumindo Light Metal is expected to under-perform the PT Primadaya. But the stock apears to be less risky and, when comparing its historical volatility, Alumindo Light Metal is 13.09 times less risky than PT Primadaya. The stock trades about -0.06 of its potential returns per unit of risk. The PT Primadaya Plastisindo is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 22,611 in PT Primadaya Plastisindo on September 12, 2024 and sell it today you would earn a total of 34,889 from holding PT Primadaya Plastisindo or generate 154.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Alumindo Light Metal vs. PT Primadaya Plastisindo
Performance |
| Timeline |
| Alumindo Light Metal |
| PT Primadaya Plastisindo |
Alumindo Light and PT Primadaya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alumindo Light and PT Primadaya
The main advantage of trading using opposite Alumindo Light and PT Primadaya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alumindo Light position performs unexpectedly, PT Primadaya 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 Primadaya will offset losses from the drop in PT Primadaya's long position.| Alumindo Light vs. Asiaplast Industries Tbk | Alumindo Light vs. Argha Karya Prima | Alumindo Light vs. Indal Aluminium Industry | Alumindo Light vs. Alakasa Industrindo Tbk |
| PT Primadaya vs. Lotte Chemical Titan | PT Primadaya vs. Agro Yasa Lestari | PT Primadaya vs. Era Mandiri Cemerlang | PT Primadaya vs. Jasnita Telekomindo 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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