Correlation Between Asahimas Flat and Alakasa Industrindo
Can any of the company-specific risk be diversified away by investing in both Asahimas Flat and Alakasa Industrindo 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 Asahimas Flat and Alakasa Industrindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asahimas Flat Glass and Alakasa Industrindo Tbk, you can compare the effects of market volatilities on Asahimas Flat and Alakasa Industrindo 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 Asahimas Flat with a short position of Alakasa Industrindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahimas Flat and Alakasa Industrindo.
Diversification Opportunities for Asahimas Flat and Alakasa Industrindo
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asahimas and Alakasa is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Asahimas Flat Glass and Alakasa Industrindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alakasa Industrindo Tbk and Asahimas Flat 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 Asahimas Flat Glass are associated (or correlated) with Alakasa Industrindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alakasa Industrindo Tbk has no effect on the direction of Asahimas Flat i.e., Asahimas Flat and Alakasa Industrindo go up and down completely randomly.
Pair Corralation between Asahimas Flat and Alakasa Industrindo
Assuming the 90 days trading horizon Asahimas Flat Glass is expected to under-perform the Alakasa Industrindo. But the stock apears to be less risky and, when comparing its historical volatility, Asahimas Flat Glass is 3.99 times less risky than Alakasa Industrindo. The stock trades about -0.02 of its potential returns per unit of risk. The Alakasa Industrindo Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 41,200 in Alakasa Industrindo Tbk on November 5, 2024 and sell it today you would lose (6,800) from holding Alakasa Industrindo Tbk or give up 16.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.57% |
| Values | Daily Returns |
Asahimas Flat Glass vs. Alakasa Industrindo Tbk
Performance |
| Timeline |
| Asahimas Flat Glass |
| Alakasa Industrindo Tbk |
Asahimas Flat and Alakasa Industrindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asahimas Flat and Alakasa Industrindo
The main advantage of trading using opposite Asahimas Flat and Alakasa Industrindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asahimas Flat position performs unexpectedly, Alakasa Industrindo 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 Alakasa Industrindo will offset losses from the drop in Alakasa Industrindo's long position.| Asahimas Flat vs. Asiaplast Industries Tbk | Asahimas Flat vs. Argha Karya Prima | Asahimas Flat vs. Astra Graphia Tbk | Asahimas Flat vs. Alumindo Light Metal |
| Alakasa Industrindo vs. Argha Karya Prima | Alakasa Industrindo vs. Alumindo Light Metal | Alakasa Industrindo vs. Asiaplast Industries Tbk | Alakasa Industrindo vs. Akbar Indomakmur Stimec |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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