Correlation Between Indo Kordsa and Primarindo Asia
Can any of the company-specific risk be diversified away by investing in both Indo Kordsa and Primarindo Asia 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 Indo Kordsa and Primarindo Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indo Kordsa Tbk and Primarindo Asia Infrastructure, you can compare the effects of market volatilities on Indo Kordsa and Primarindo Asia 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 Indo Kordsa with a short position of Primarindo Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Kordsa and Primarindo Asia.
Diversification Opportunities for Indo Kordsa and Primarindo Asia
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Indo and Primarindo is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Indo Kordsa Tbk and Primarindo Asia Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primarindo Asia Infr and Indo Kordsa 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 Indo Kordsa Tbk are associated (or correlated) with Primarindo Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primarindo Asia Infr has no effect on the direction of Indo Kordsa i.e., Indo Kordsa and Primarindo Asia go up and down completely randomly.
Pair Corralation between Indo Kordsa and Primarindo Asia
Assuming the 90 days trading horizon Indo Kordsa Tbk is expected to under-perform the Primarindo Asia. But the stock apears to be less risky and, when comparing its historical volatility, Indo Kordsa Tbk is 1.97 times less risky than Primarindo Asia. The stock trades about -0.02 of its potential returns per unit of risk. The Primarindo Asia Infrastructure is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 7,000 in Primarindo Asia Infrastructure on August 29, 2024 and sell it today you would earn a total of 2,700 from holding Primarindo Asia Infrastructure or generate 38.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indo Kordsa Tbk vs. Primarindo Asia Infrastructure
Performance |
| Timeline |
| Indo Kordsa Tbk |
| Primarindo Asia Infr |
Indo Kordsa and Primarindo Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indo Kordsa and Primarindo Asia
The main advantage of trading using opposite Indo Kordsa and Primarindo Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Kordsa position performs unexpectedly, Primarindo Asia 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 Primarindo Asia will offset losses from the drop in Primarindo Asia's long position.| Indo Kordsa vs. Goodyear Indonesia Tbk | Indo Kordsa vs. Sepatu Bata Tbk | Indo Kordsa vs. Indospring Tbk | Indo Kordsa vs. Ever Shine Textile |
| Primarindo Asia vs. Sepatu Bata Tbk | Primarindo Asia vs. Ever Shine Textile | Primarindo Asia vs. Argo Pantes Tbk | Primarindo Asia vs. Indo Kordsa 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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