Correlation Between Hexindo Adiperkasa and Modern Internasional
Can any of the company-specific risk be diversified away by investing in both Hexindo Adiperkasa and Modern Internasional 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 Hexindo Adiperkasa and Modern Internasional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexindo Adiperkasa Tbk and Modern Internasional Tbk, you can compare the effects of market volatilities on Hexindo Adiperkasa and Modern Internasional 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 Hexindo Adiperkasa with a short position of Modern Internasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexindo Adiperkasa and Modern Internasional.
Diversification Opportunities for Hexindo Adiperkasa and Modern Internasional
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hexindo and Modern is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hexindo Adiperkasa Tbk and Modern Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modern Internasional Tbk and Hexindo Adiperkasa 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 Hexindo Adiperkasa Tbk are associated (or correlated) with Modern Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modern Internasional Tbk has no effect on the direction of Hexindo Adiperkasa i.e., Hexindo Adiperkasa and Modern Internasional go up and down completely randomly.
Pair Corralation between Hexindo Adiperkasa and Modern Internasional
Assuming the 90 days trading horizon Hexindo Adiperkasa Tbk is expected to generate 0.15 times more return on investment than Modern Internasional. However, Hexindo Adiperkasa Tbk is 6.75 times less risky than Modern Internasional. It trades about -0.59 of its potential returns per unit of risk. Modern Internasional Tbk is currently generating about -0.22 per unit of risk. If you would invest 565,000 in Hexindo Adiperkasa Tbk on August 27, 2024 and sell it today you would lose (82,000) from holding Hexindo Adiperkasa Tbk or give up 14.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexindo Adiperkasa Tbk vs. Modern Internasional Tbk
Performance |
| Timeline |
| Hexindo Adiperkasa Tbk |
| Modern Internasional Tbk |
Hexindo Adiperkasa and Modern Internasional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexindo Adiperkasa and Modern Internasional
The main advantage of trading using opposite Hexindo Adiperkasa and Modern Internasional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexindo Adiperkasa position performs unexpectedly, Modern Internasional 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 Modern Internasional will offset losses from the drop in Modern Internasional's long position.The idea behind Hexindo Adiperkasa Tbk and Modern Internasional 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.| Modern Internasional vs. Astra Graphia Tbk | Modern Internasional vs. Hexindo Adiperkasa Tbk | Modern Internasional vs. Lautan Luas Tbk | Modern Internasional vs. Citra Marga Nusaphala |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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