Correlation Between Fortune Indonesia and Indosat Tbk
Can any of the company-specific risk be diversified away by investing in both Fortune Indonesia and Indosat Tbk 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 Fortune Indonesia and Indosat Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Indonesia Tbk and Indosat Tbk, you can compare the effects of market volatilities on Fortune Indonesia and Indosat Tbk 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 Fortune Indonesia with a short position of Indosat Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Indonesia and Indosat Tbk.
Diversification Opportunities for Fortune Indonesia and Indosat Tbk
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fortune and Indosat is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Indonesia Tbk and Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indosat Tbk and Fortune Indonesia 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 Fortune Indonesia Tbk are associated (or correlated) with Indosat Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indosat Tbk has no effect on the direction of Fortune Indonesia i.e., Fortune Indonesia and Indosat Tbk go up and down completely randomly.
Pair Corralation between Fortune Indonesia and Indosat Tbk
Assuming the 90 days trading horizon Fortune Indonesia Tbk is expected to generate 1.44 times more return on investment than Indosat Tbk. However, Fortune Indonesia is 1.44 times more volatile than Indosat Tbk. It trades about 0.14 of its potential returns per unit of risk. Indosat Tbk is currently generating about 0.0 per unit of risk. If you would invest 21,800 in Fortune Indonesia Tbk on September 1, 2024 and sell it today you would earn a total of 443,200 from holding Fortune Indonesia Tbk or generate 2033.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortune Indonesia Tbk vs. Indosat Tbk
Performance |
| Timeline |
| Fortune Indonesia Tbk |
| Indosat Tbk |
Fortune Indonesia and Indosat Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Indonesia and Indosat Tbk
The main advantage of trading using opposite Fortune Indonesia and Indosat Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Indonesia position performs unexpectedly, Indosat Tbk 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 Indosat Tbk will offset losses from the drop in Indosat Tbk's long position.| Fortune Indonesia vs. Indosat Tbk | Fortune Indonesia vs. XL Axiata Tbk | Fortune Indonesia vs. Energi Mega Persada | Fortune Indonesia vs. Bakrie Brothers Tbk |
| Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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