Correlation Between Archi Indonesia and Avia Avian
Can any of the company-specific risk be diversified away by investing in both Archi Indonesia and Avia Avian 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 Archi Indonesia and Avia Avian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archi Indonesia Tbk and Avia Avian PT, you can compare the effects of market volatilities on Archi Indonesia and Avia Avian 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 Archi Indonesia with a short position of Avia Avian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archi Indonesia and Avia Avian.
Diversification Opportunities for Archi Indonesia and Avia Avian
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Archi and Avia is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Archi Indonesia Tbk and Avia Avian PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avia Avian PT and Archi Indonesia 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 Archi Indonesia Tbk are associated (or correlated) with Avia Avian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avia Avian PT has no effect on the direction of Archi Indonesia i.e., Archi Indonesia and Avia Avian go up and down completely randomly.
Pair Corralation between Archi Indonesia and Avia Avian
Assuming the 90 days trading horizon Archi Indonesia Tbk is expected to generate 1.21 times more return on investment than Avia Avian. However, Archi Indonesia is 1.21 times more volatile than Avia Avian PT. It trades about -0.01 of its potential returns per unit of risk. Avia Avian PT is currently generating about -0.05 per unit of risk. If you would invest 33,600 in Archi Indonesia Tbk on August 31, 2024 and sell it today you would lose (7,600) from holding Archi Indonesia Tbk or give up 22.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archi Indonesia Tbk vs. Avia Avian PT
Performance |
| Timeline |
| Archi Indonesia Tbk |
| Avia Avian PT |
Archi Indonesia and Avia Avian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archi Indonesia and Avia Avian
The main advantage of trading using opposite Archi Indonesia and Avia Avian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archi Indonesia position performs unexpectedly, Avia Avian 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 Avia Avian will offset losses from the drop in Avia Avian's long position.| Archi Indonesia vs. Triputra Agro Persada | Archi Indonesia vs. Berkah Beton Sadaya | Archi Indonesia vs. PAM Mineral Tbk | Archi Indonesia vs. PT Bukalapak |
| Avia Avian vs. Dayamitra Telekomunikasi PT | Avia Avian vs. Cisarua Mountain Dairy | Avia Avian vs. PT Bukalapak | Avia Avian vs. Sumber Alfaria Trijaya |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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