Correlation Between Champion Pacific and Indal Aluminium
Can any of the company-specific risk be diversified away by investing in both Champion Pacific and Indal Aluminium 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 Champion Pacific and Indal Aluminium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Pacific Indonesia and Indal Aluminium Industry, you can compare the effects of market volatilities on Champion Pacific and Indal Aluminium 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 Champion Pacific with a short position of Indal Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Pacific and Indal Aluminium.
Diversification Opportunities for Champion Pacific and Indal Aluminium
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Champion and Indal is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Champion Pacific Indonesia and Indal Aluminium Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indal Aluminium Industry and Champion Pacific 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 Champion Pacific Indonesia are associated (or correlated) with Indal Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indal Aluminium Industry has no effect on the direction of Champion Pacific i.e., Champion Pacific and Indal Aluminium go up and down completely randomly.
Pair Corralation between Champion Pacific and Indal Aluminium
Assuming the 90 days trading horizon Champion Pacific Indonesia is expected to generate 1.02 times more return on investment than Indal Aluminium. However, Champion Pacific is 1.02 times more volatile than Indal Aluminium Industry. It trades about 0.07 of its potential returns per unit of risk. Indal Aluminium Industry is currently generating about -0.06 per unit of risk. If you would invest 52,000 in Champion Pacific Indonesia on November 5, 2024 and sell it today you would earn a total of 1,000.00 from holding Champion Pacific Indonesia or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Pacific Indonesia vs. Indal Aluminium Industry
Performance |
| Timeline |
| Champion Pacific Ind |
| Indal Aluminium Industry |
Champion Pacific and Indal Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Pacific and Indal Aluminium
The main advantage of trading using opposite Champion Pacific and Indal Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Pacific position performs unexpectedly, Indal Aluminium 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 Indal Aluminium will offset losses from the drop in Indal Aluminium's long position.| Champion Pacific vs. Intanwijaya Internasional Tbk | Champion Pacific vs. Asiaplast Industries Tbk | Champion Pacific vs. Trias Sentosa Tbk | Champion Pacific vs. Lotte Chemical Titan |
| Indal Aluminium vs. Intanwijaya Internasional Tbk | Indal Aluminium vs. Alumindo Light Metal | Indal Aluminium vs. Champion Pacific Indonesia | Indal Aluminium vs. Betonjaya Manunggal 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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