Correlation Between Asiaplast Industries and Ekadharma International
Can any of the company-specific risk be diversified away by investing in both Asiaplast Industries and Ekadharma International 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 Asiaplast Industries and Ekadharma International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asiaplast Industries Tbk and Ekadharma International Tbk, you can compare the effects of market volatilities on Asiaplast Industries and Ekadharma International 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 Asiaplast Industries with a short position of Ekadharma International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asiaplast Industries and Ekadharma International.
Diversification Opportunities for Asiaplast Industries and Ekadharma International
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asiaplast and Ekadharma is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Asiaplast Industries Tbk and Ekadharma International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekadharma International and Asiaplast Industries 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 Asiaplast Industries Tbk are associated (or correlated) with Ekadharma International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekadharma International has no effect on the direction of Asiaplast Industries i.e., Asiaplast Industries and Ekadharma International go up and down completely randomly.
Pair Corralation between Asiaplast Industries and Ekadharma International
Assuming the 90 days trading horizon Asiaplast Industries Tbk is expected to generate 2.67 times more return on investment than Ekadharma International. However, Asiaplast Industries is 2.67 times more volatile than Ekadharma International Tbk. It trades about 0.01 of its potential returns per unit of risk. Ekadharma International Tbk is currently generating about -0.02 per unit of risk. If you would invest 56,964 in Asiaplast Industries Tbk on August 24, 2024 and sell it today you would lose (2,964) from holding Asiaplast Industries Tbk or give up 5.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asiaplast Industries Tbk vs. Ekadharma International Tbk
Performance |
| Timeline |
| Asiaplast Industries Tbk |
| Ekadharma International |
Asiaplast Industries and Ekadharma International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asiaplast Industries and Ekadharma International
The main advantage of trading using opposite Asiaplast Industries and Ekadharma International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asiaplast Industries position performs unexpectedly, Ekadharma International 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 Ekadharma International will offset losses from the drop in Ekadharma International's long position.| Asiaplast Industries vs. Argha Karya Prima | Asiaplast Industries vs. Alumindo Light Metal | Asiaplast Industries vs. Anugerah Kagum Karya | Asiaplast Industries vs. Asahimas Flat Glass |
| Ekadharma International vs. Samudera Indonesia Tbk | Ekadharma International vs. Steady Safe TBK | Ekadharma International vs. Rukun Raharja Tbk | Ekadharma International vs. PT Temas 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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