Correlation Between Goodyear Indonesia and Primarindo Asia
Can any of the company-specific risk be diversified away by investing in both Goodyear Indonesia and Primarindo Asia 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 Goodyear Indonesia and Primarindo Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodyear Indonesia Tbk and Primarindo Asia Infrastructure, you can compare the effects of market volatilities on Goodyear Indonesia and Primarindo Asia 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 Goodyear Indonesia with a short position of Primarindo Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Indonesia and Primarindo Asia.
Diversification Opportunities for Goodyear Indonesia and Primarindo Asia
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goodyear and Primarindo is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Indonesia Tbk and Primarindo Asia Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primarindo Asia Infr and Goodyear 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 Goodyear Indonesia Tbk are associated (or correlated) with Primarindo Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primarindo Asia Infr has no effect on the direction of Goodyear Indonesia i.e., Goodyear Indonesia and Primarindo Asia go up and down completely randomly.
Pair Corralation between Goodyear Indonesia and Primarindo Asia
Assuming the 90 days trading horizon Goodyear Indonesia is expected to generate 1.56 times less return on investment than Primarindo Asia. But when comparing it to its historical volatility, Goodyear Indonesia Tbk is 1.1 times less risky than Primarindo Asia. It trades about 0.01 of its potential returns per unit of risk. Primarindo Asia Infrastructure is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,500 in Primarindo Asia Infrastructure on August 29, 2024 and sell it today you would earn a total of 200.00 from holding Primarindo Asia Infrastructure or generate 2.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.57% |
| Values | Daily Returns |
Goodyear Indonesia Tbk vs. Primarindo Asia Infrastructure
Performance |
| Timeline |
| Goodyear Indonesia Tbk |
| Primarindo Asia Infr |
Goodyear Indonesia and Primarindo Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Indonesia and Primarindo Asia
The main advantage of trading using opposite Goodyear Indonesia and Primarindo Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Indonesia position performs unexpectedly, Primarindo Asia 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 Primarindo Asia will offset losses from the drop in Primarindo Asia's long position.| Goodyear Indonesia vs. Indo Kordsa Tbk | Goodyear Indonesia vs. Indospring Tbk | Goodyear Indonesia vs. Sepatu Bata Tbk | Goodyear Indonesia vs. Astra Otoparts Tbk |
| Primarindo Asia vs. Sepatu Bata Tbk | Primarindo Asia vs. Ever Shine Textile | Primarindo Asia vs. Argo Pantes Tbk | Primarindo Asia vs. Indo Kordsa 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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