Correlation Between Intanwijaya Internasional and Indo Straits
Can any of the company-specific risk be diversified away by investing in both Intanwijaya Internasional and Indo Straits 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 Intanwijaya Internasional and Indo Straits into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intanwijaya Internasional Tbk and Indo Straits Tbk, you can compare the effects of market volatilities on Intanwijaya Internasional and Indo Straits 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 Intanwijaya Internasional with a short position of Indo Straits. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intanwijaya Internasional and Indo Straits.
Diversification Opportunities for Intanwijaya Internasional and Indo Straits
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Intanwijaya and Indo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Intanwijaya Internasional Tbk and Indo Straits Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Straits Tbk and Intanwijaya Internasional 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 Intanwijaya Internasional Tbk are associated (or correlated) with Indo Straits. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Straits Tbk has no effect on the direction of Intanwijaya Internasional i.e., Intanwijaya Internasional and Indo Straits go up and down completely randomly.
Pair Corralation between Intanwijaya Internasional and Indo Straits
Assuming the 90 days trading horizon Intanwijaya Internasional Tbk is expected to generate 0.28 times more return on investment than Indo Straits. However, Intanwijaya Internasional Tbk is 3.56 times less risky than Indo Straits. It trades about 0.04 of its potential returns per unit of risk. Indo Straits Tbk is currently generating about -0.01 per unit of risk. If you would invest 50,952 in Intanwijaya Internasional Tbk on September 5, 2024 and sell it today you would earn a total of 7,048 from holding Intanwijaya Internasional Tbk or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intanwijaya Internasional Tbk vs. Indo Straits Tbk
Performance |
| Timeline |
| Intanwijaya Internasional |
| Indo Straits Tbk |
Intanwijaya Internasional and Indo Straits Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intanwijaya Internasional and Indo Straits
The main advantage of trading using opposite Intanwijaya Internasional and Indo Straits positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intanwijaya Internasional position performs unexpectedly, Indo Straits 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 Indo Straits will offset losses from the drop in Indo Straits' long position.The idea behind Intanwijaya Internasional Tbk and Indo Straits 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.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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