Correlation Between Communication Cable and Leyand International
Can any of the company-specific risk be diversified away by investing in both Communication Cable and Leyand 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 Communication Cable and Leyand International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Communication Cable Systems and Leyand International Tbk, you can compare the effects of market volatilities on Communication Cable and Leyand 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 Communication Cable with a short position of Leyand International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communication Cable and Leyand International.
Diversification Opportunities for Communication Cable and Leyand International
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Communication and Leyand is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Communication Cable Systems and Leyand International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leyand International Tbk and Communication Cable 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 Communication Cable Systems are associated (or correlated) with Leyand International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leyand International Tbk has no effect on the direction of Communication Cable i.e., Communication Cable and Leyand International go up and down completely randomly.
Pair Corralation between Communication Cable and Leyand International
Assuming the 90 days trading horizon Communication Cable Systems is expected to generate 2.11 times more return on investment than Leyand International. However, Communication Cable is 2.11 times more volatile than Leyand International Tbk. It trades about 0.07 of its potential returns per unit of risk. Leyand International Tbk is currently generating about -0.41 per unit of risk. If you would invest 24,000 in Communication Cable Systems on September 4, 2024 and sell it today you would earn a total of 1,400 from holding Communication Cable Systems or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Communication Cable Systems vs. Leyand International Tbk
Performance |
| Timeline |
| Communication Cable |
| Leyand International Tbk |
Communication Cable and Leyand International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Communication Cable and Leyand International
The main advantage of trading using opposite Communication Cable and Leyand International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Communication Cable position performs unexpectedly, Leyand 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 Leyand International will offset losses from the drop in Leyand International's long position.| Communication Cable vs. Berkah Prima Perkasa | Communication Cable vs. Hartadinata Abadi Tbk | Communication Cable vs. Estika Tata Tiara | Communication Cable vs. Garudafood Putra Putri |
| Leyand International vs. Indo Acidatama Tbk | Leyand International vs. City Retail Developments | Leyand International vs. Envy Technologies Indonesia | Leyand International vs. Eastparc Hotel 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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