Correlation Between Communication Cable and Modern Internasional
Can any of the company-specific risk be diversified away by investing in both Communication Cable and Modern Internasional 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 Modern Internasional 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 Modern Internasional Tbk, you can compare the effects of market volatilities on Communication Cable and Modern Internasional 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 Modern Internasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communication Cable and Modern Internasional.
Diversification Opportunities for Communication Cable and Modern Internasional
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Communication and Modern is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Communication Cable Systems and Modern Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modern Internasional 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 Modern Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modern Internasional Tbk has no effect on the direction of Communication Cable i.e., Communication Cable and Modern Internasional go up and down completely randomly.
Pair Corralation between Communication Cable and Modern Internasional
Assuming the 90 days trading horizon Communication Cable Systems is expected to under-perform the Modern Internasional. But the stock apears to be less risky and, when comparing its historical volatility, Communication Cable Systems is 2.84 times less risky than Modern Internasional. The stock trades about -0.09 of its potential returns per unit of risk. The Modern Internasional Tbk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 500.00 in Modern Internasional Tbk on September 2, 2024 and sell it today you would earn a total of 100.00 from holding Modern Internasional Tbk or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Communication Cable Systems vs. Modern Internasional Tbk
Performance |
| Timeline |
| Communication Cable |
| Modern Internasional Tbk |
Communication Cable and Modern Internasional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Communication Cable and Modern Internasional
The main advantage of trading using opposite Communication Cable and Modern Internasional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Communication Cable position performs unexpectedly, Modern Internasional 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 Modern Internasional will offset losses from the drop in Modern Internasional'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 |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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