Correlation Between Alumindo Light and Indo Acidatama
Can any of the company-specific risk be diversified away by investing in both Alumindo Light and Indo Acidatama 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 Indo Acidatama 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 Indo Acidatama Tbk, you can compare the effects of market volatilities on Alumindo Light and Indo Acidatama 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 Indo Acidatama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumindo Light and Indo Acidatama.
Diversification Opportunities for Alumindo Light and Indo Acidatama
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alumindo and Indo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Alumindo Light Metal and Indo Acidatama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Acidatama Tbk 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 Indo Acidatama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Acidatama Tbk has no effect on the direction of Alumindo Light i.e., Alumindo Light and Indo Acidatama go up and down completely randomly.
Pair Corralation between Alumindo Light and Indo Acidatama
Assuming the 90 days trading horizon Alumindo Light Metal is expected to generate 2.56 times more return on investment than Indo Acidatama. However, Alumindo Light is 2.56 times more volatile than Indo Acidatama Tbk. It trades about 0.1 of its potential returns per unit of risk. Indo Acidatama Tbk is currently generating about -0.03 per unit of risk. If you would invest 6,600 in Alumindo Light Metal on August 30, 2024 and sell it today you would earn a total of 800.00 from holding Alumindo Light Metal or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alumindo Light Metal vs. Indo Acidatama Tbk
Performance |
| Timeline |
| Alumindo Light Metal |
| Indo Acidatama Tbk |
Alumindo Light and Indo Acidatama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alumindo Light and Indo Acidatama
The main advantage of trading using opposite Alumindo Light and Indo Acidatama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alumindo Light position performs unexpectedly, Indo Acidatama 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 Indo Acidatama will offset losses from the drop in Indo Acidatama's long position.| Alumindo Light vs. Barito Pacific Tbk | Alumindo Light vs. Charoen Pokphand Indonesia | Alumindo Light vs. Indocement Tunggal Prakarsa |
| Indo Acidatama vs. PT Sreeya Sewu | Indo Acidatama vs. Trias Sentosa Tbk | Indo Acidatama vs. Slj Global Tbk | Indo Acidatama vs. Suparma 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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