Correlation Between Indo Kordsa and RMK Energy
Can any of the company-specific risk be diversified away by investing in both Indo Kordsa and RMK Energy 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 RMK Energy 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 RMK Energy PT, you can compare the effects of market volatilities on Indo Kordsa and RMK Energy 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 RMK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Kordsa and RMK Energy.
Diversification Opportunities for Indo Kordsa and RMK Energy
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Indo and RMK is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Indo Kordsa Tbk and RMK Energy PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMK Energy PT 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 RMK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMK Energy PT has no effect on the direction of Indo Kordsa i.e., Indo Kordsa and RMK Energy go up and down completely randomly.
Pair Corralation between Indo Kordsa and RMK Energy
Assuming the 90 days trading horizon Indo Kordsa Tbk is expected to generate 0.67 times more return on investment than RMK Energy. However, Indo Kordsa Tbk is 1.49 times less risky than RMK Energy. It trades about -0.02 of its potential returns per unit of risk. RMK Energy PT is currently generating about -0.04 per unit of risk. If you would invest 733,713 in Indo Kordsa Tbk on August 26, 2024 and sell it today you would lose (151,213) from holding Indo Kordsa Tbk or give up 20.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indo Kordsa Tbk vs. RMK Energy PT
Performance |
| Timeline |
| Indo Kordsa Tbk |
| RMK Energy PT |
Indo Kordsa and RMK Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indo Kordsa and RMK Energy
The main advantage of trading using opposite Indo Kordsa and RMK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Kordsa position performs unexpectedly, RMK Energy 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 RMK Energy will offset losses from the drop in RMK Energy'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 |
| RMK Energy vs. Adaro Minerals Indonesia | RMK Energy vs. Prima Andalan Mandiri | RMK Energy vs. Sumber Global Energy | RMK Energy vs. Golden Eagle Energy |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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