Correlation Between Indonesia Fibreboard and Panca Budi
Can any of the company-specific risk be diversified away by investing in both Indonesia Fibreboard and Panca Budi 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 Indonesia Fibreboard and Panca Budi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indonesia Fibreboard Industry and Panca Budi Idaman, you can compare the effects of market volatilities on Indonesia Fibreboard and Panca Budi 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 Indonesia Fibreboard with a short position of Panca Budi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indonesia Fibreboard and Panca Budi.
Diversification Opportunities for Indonesia Fibreboard and Panca Budi
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Indonesia and Panca is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Indonesia Fibreboard Industry and Panca Budi Idaman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panca Budi Idaman and Indonesia Fibreboard 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 Indonesia Fibreboard Industry are associated (or correlated) with Panca Budi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panca Budi Idaman has no effect on the direction of Indonesia Fibreboard i.e., Indonesia Fibreboard and Panca Budi go up and down completely randomly.
Pair Corralation between Indonesia Fibreboard and Panca Budi
Assuming the 90 days trading horizon Indonesia Fibreboard Industry is expected to generate 1.69 times more return on investment than Panca Budi. However, Indonesia Fibreboard is 1.69 times more volatile than Panca Budi Idaman. It trades about 0.11 of its potential returns per unit of risk. Panca Budi Idaman is currently generating about -0.04 per unit of risk. If you would invest 19,900 in Indonesia Fibreboard Industry on September 14, 2024 and sell it today you would earn a total of 1,300 from holding Indonesia Fibreboard Industry or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indonesia Fibreboard Industry vs. Panca Budi Idaman
Performance |
| Timeline |
| Indonesia Fibreboard |
| Panca Budi Idaman |
Indonesia Fibreboard and Panca Budi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indonesia Fibreboard and Panca Budi
The main advantage of trading using opposite Indonesia Fibreboard and Panca Budi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indonesia Fibreboard position performs unexpectedly, Panca Budi 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 Panca Budi will offset losses from the drop in Panca Budi's long position.| Indonesia Fibreboard vs. Gunung Raja Paksi | Indonesia Fibreboard vs. Satyamitra Kemas Lestari | Indonesia Fibreboard vs. Ifishdeco PT | Indonesia Fibreboard vs. Saraswanti Anugerah Makmur |
| Panca Budi vs. Kedaung Indah Can | Panca Budi vs. Kabelindo Murni Tbk | Panca Budi vs. Champion Pacific Indonesia | Panca Budi vs. Bhuwanatala Indah Permai |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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