Correlation Between Citra Marga and Indo Kordsa
Can any of the company-specific risk be diversified away by investing in both Citra Marga and Indo Kordsa 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 Citra Marga and Indo Kordsa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citra Marga Nusaphala and Indo Kordsa Tbk, you can compare the effects of market volatilities on Citra Marga and Indo Kordsa 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 Citra Marga with a short position of Indo Kordsa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citra Marga and Indo Kordsa.
Diversification Opportunities for Citra Marga and Indo Kordsa
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citra and Indo is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Citra Marga Nusaphala and Indo Kordsa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Kordsa Tbk and Citra Marga 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 Citra Marga Nusaphala are associated (or correlated) with Indo Kordsa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Kordsa Tbk has no effect on the direction of Citra Marga i.e., Citra Marga and Indo Kordsa go up and down completely randomly.
Pair Corralation between Citra Marga and Indo Kordsa
Assuming the 90 days trading horizon Citra Marga Nusaphala is expected to under-perform the Indo Kordsa. But the stock apears to be less risky and, when comparing its historical volatility, Citra Marga Nusaphala is 6.25 times less risky than Indo Kordsa. The stock trades about -0.14 of its potential returns per unit of risk. The Indo Kordsa Tbk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 574,269 in Indo Kordsa Tbk on August 27, 2024 and sell it today you would earn a total of 13,231 from holding Indo Kordsa Tbk or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citra Marga Nusaphala vs. Indo Kordsa Tbk
Performance |
| Timeline |
| Citra Marga Nusaphala |
| Indo Kordsa Tbk |
Citra Marga and Indo Kordsa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citra Marga and Indo Kordsa
The main advantage of trading using opposite Citra Marga and Indo Kordsa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citra Marga position performs unexpectedly, Indo Kordsa 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 Indo Kordsa will offset losses from the drop in Indo Kordsa's long position.The idea behind Citra Marga Nusaphala and Indo Kordsa Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Indo Kordsa vs. Goodyear Indonesia Tbk | Indo Kordsa vs. Sepatu Bata Tbk | Indo Kordsa vs. Indospring Tbk | Indo Kordsa vs. Ever Shine Textile |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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