Correlation Between Alphabet and Indah Kiat
Can any of the company-specific risk be diversified away by investing in both Alphabet and Indah Kiat 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 Alphabet and Indah Kiat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Indah Kiat Pulp, you can compare the effects of market volatilities on Alphabet and Indah Kiat 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 Alphabet with a short position of Indah Kiat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Indah Kiat.
Diversification Opportunities for Alphabet and Indah Kiat
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alphabet and Indah is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Indah Kiat Pulp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indah Kiat Pulp and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Indah Kiat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indah Kiat Pulp has no effect on the direction of Alphabet i.e., Alphabet and Indah Kiat go up and down completely randomly.
Pair Corralation between Alphabet and Indah Kiat
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.1 times more return on investment than Indah Kiat. However, Alphabet is 1.1 times more volatile than Indah Kiat Pulp. It trades about 0.07 of its potential returns per unit of risk. Indah Kiat Pulp is currently generating about -0.33 per unit of risk. If you would invest 16,448 in Alphabet Inc Class C on August 24, 2024 and sell it today you would earn a total of 476.00 from holding Alphabet Inc Class C or generate 2.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Indah Kiat Pulp
Performance |
| Timeline |
| Alphabet Class C |
| Indah Kiat Pulp |
Alphabet and Indah Kiat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Indah Kiat
The main advantage of trading using opposite Alphabet and Indah Kiat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Indah Kiat 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 Indah Kiat will offset losses from the drop in Indah Kiat's long position.The idea behind Alphabet Inc Class C and Indah Kiat Pulp 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.| Indah Kiat vs. Kedaung Indah Can | Indah Kiat vs. Langgeng Makmur Industri | Indah Kiat vs. Kabelindo Murni Tbk | Indah Kiat vs. Mustika Ratu 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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