Correlation Between Hero Supermarket and Indorama Synthetics
Can any of the company-specific risk be diversified away by investing in both Hero Supermarket and Indorama Synthetics 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 Hero Supermarket and Indorama Synthetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hero Supermarket Tbk and Indorama Synthetics Tbk, you can compare the effects of market volatilities on Hero Supermarket and Indorama Synthetics 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 Hero Supermarket with a short position of Indorama Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hero Supermarket and Indorama Synthetics.
Diversification Opportunities for Hero Supermarket and Indorama Synthetics
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hero and Indorama is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hero Supermarket Tbk and Indorama Synthetics Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Synthetics Tbk and Hero Supermarket 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 Hero Supermarket Tbk are associated (or correlated) with Indorama Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Synthetics Tbk has no effect on the direction of Hero Supermarket i.e., Hero Supermarket and Indorama Synthetics go up and down completely randomly.
Pair Corralation between Hero Supermarket and Indorama Synthetics
Assuming the 90 days trading horizon Hero Supermarket Tbk is expected to generate 1.07 times more return on investment than Indorama Synthetics. However, Hero Supermarket is 1.07 times more volatile than Indorama Synthetics Tbk. It trades about -0.12 of its potential returns per unit of risk. Indorama Synthetics Tbk is currently generating about -0.2 per unit of risk. If you would invest 65,500 in Hero Supermarket Tbk on September 3, 2024 and sell it today you would lose (8,500) from holding Hero Supermarket Tbk or give up 12.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hero Supermarket Tbk vs. Indorama Synthetics Tbk
Performance |
| Timeline |
| Hero Supermarket Tbk |
| Indorama Synthetics Tbk |
Hero Supermarket and Indorama Synthetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hero Supermarket and Indorama Synthetics
The main advantage of trading using opposite Hero Supermarket and Indorama Synthetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hero Supermarket position performs unexpectedly, Indorama Synthetics 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 Indorama Synthetics will offset losses from the drop in Indorama Synthetics' long position.| Hero Supermarket vs. Astra International Tbk | Hero Supermarket vs. Unilever Indonesia Tbk | Hero Supermarket vs. Telkom Indonesia Tbk | Hero Supermarket vs. Bank Mandiri Persero |
| Indorama Synthetics vs. Mitra Pinasthika Mustika | Indorama Synthetics vs. Jakarta Int Hotels | Indorama Synthetics vs. Asuransi Harta Aman | Indorama Synthetics vs. Indosterling Technomedia 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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