Correlation Between Indal Aluminium and Alumindo Light
Can any of the company-specific risk be diversified away by investing in both Indal Aluminium and Alumindo Light 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 Indal Aluminium and Alumindo Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indal Aluminium Industry and Alumindo Light Metal, you can compare the effects of market volatilities on Indal Aluminium and Alumindo Light 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 Indal Aluminium with a short position of Alumindo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indal Aluminium and Alumindo Light.
Diversification Opportunities for Indal Aluminium and Alumindo Light
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Indal and Alumindo is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Indal Aluminium Industry and Alumindo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumindo Light Metal and Indal Aluminium 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 Indal Aluminium Industry are associated (or correlated) with Alumindo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumindo Light Metal has no effect on the direction of Indal Aluminium i.e., Indal Aluminium and Alumindo Light go up and down completely randomly.
Pair Corralation between Indal Aluminium and Alumindo Light
Assuming the 90 days trading horizon Indal Aluminium Industry is expected to generate 0.7 times more return on investment than Alumindo Light. However, Indal Aluminium Industry is 1.42 times less risky than Alumindo Light. It trades about -0.04 of its potential returns per unit of risk. Alumindo Light Metal is currently generating about -0.05 per unit of risk. If you would invest 25,600 in Indal Aluminium Industry on September 1, 2024 and sell it today you would lose (12,800) from holding Indal Aluminium Industry or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.54% |
| Values | Daily Returns |
Indal Aluminium Industry vs. Alumindo Light Metal
Performance |
| Timeline |
| Indal Aluminium Industry |
| Alumindo Light Metal |
Indal Aluminium and Alumindo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indal Aluminium and Alumindo Light
The main advantage of trading using opposite Indal Aluminium and Alumindo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indal Aluminium position performs unexpectedly, Alumindo Light 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 Alumindo Light will offset losses from the drop in Alumindo Light's long position.| Indal Aluminium vs. Intanwijaya Internasional Tbk | Indal Aluminium vs. Alumindo Light Metal | Indal Aluminium vs. Champion Pacific Indonesia | Indal Aluminium vs. Betonjaya Manunggal Tbk |
| Alumindo Light vs. Perusahaan Gas Negara | Alumindo Light vs. Telkom Indonesia Tbk | Alumindo Light vs. Mitra Pinasthika Mustika | Alumindo Light vs. Jakarta Int Hotels |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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