Correlation Between Hexindo Adiperkasa and Prodia Widyahusada
Can any of the company-specific risk be diversified away by investing in both Hexindo Adiperkasa and Prodia Widyahusada 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 Prodia Widyahusada 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 Prodia Widyahusada Tbk, you can compare the effects of market volatilities on Hexindo Adiperkasa and Prodia Widyahusada 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 Prodia Widyahusada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexindo Adiperkasa and Prodia Widyahusada.
Diversification Opportunities for Hexindo Adiperkasa and Prodia Widyahusada
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hexindo and Prodia is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hexindo Adiperkasa Tbk and Prodia Widyahusada Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodia Widyahusada 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 Prodia Widyahusada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodia Widyahusada Tbk has no effect on the direction of Hexindo Adiperkasa i.e., Hexindo Adiperkasa and Prodia Widyahusada go up and down completely randomly.
Pair Corralation between Hexindo Adiperkasa and Prodia Widyahusada
Assuming the 90 days trading horizon Hexindo Adiperkasa Tbk is expected to under-perform the Prodia Widyahusada. In addition to that, Hexindo Adiperkasa is 1.19 times more volatile than Prodia Widyahusada Tbk. It trades about -0.27 of its total potential returns per unit of risk. Prodia Widyahusada Tbk is currently generating about -0.15 per unit of volatility. If you would invest 319,000 in Prodia Widyahusada Tbk on August 29, 2024 and sell it today you would lose (40,000) from holding Prodia Widyahusada Tbk or give up 12.54% 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. Prodia Widyahusada Tbk
Performance |
| Timeline |
| Hexindo Adiperkasa Tbk |
| Prodia Widyahusada Tbk |
Hexindo Adiperkasa and Prodia Widyahusada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexindo Adiperkasa and Prodia Widyahusada
The main advantage of trading using opposite Hexindo Adiperkasa and Prodia Widyahusada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexindo Adiperkasa position performs unexpectedly, Prodia Widyahusada 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 Prodia Widyahusada will offset losses from the drop in Prodia Widyahusada's long position.| Hexindo Adiperkasa vs. Bisi International Tbk | Hexindo Adiperkasa vs. Sampoerna Agro Tbk | Hexindo Adiperkasa vs. Akr Corporindo Tbk | Hexindo Adiperkasa vs. Solusi Bangun Indonesia |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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