Correlation Between Vale Indonesia and Arthavest Tbk
Can any of the company-specific risk be diversified away by investing in both Vale Indonesia and Arthavest Tbk 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 Vale Indonesia and Arthavest Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale Indonesia Tbk and Arthavest Tbk, you can compare the effects of market volatilities on Vale Indonesia and Arthavest Tbk 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 Vale Indonesia with a short position of Arthavest Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale Indonesia and Arthavest Tbk.
Diversification Opportunities for Vale Indonesia and Arthavest Tbk
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vale and Arthavest is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vale Indonesia Tbk and Arthavest Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthavest Tbk and Vale Indonesia 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 Vale Indonesia Tbk are associated (or correlated) with Arthavest Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthavest Tbk has no effect on the direction of Vale Indonesia i.e., Vale Indonesia and Arthavest Tbk go up and down completely randomly.
Pair Corralation between Vale Indonesia and Arthavest Tbk
Assuming the 90 days trading horizon Vale Indonesia Tbk is expected to generate 2.13 times more return on investment than Arthavest Tbk. However, Vale Indonesia is 2.13 times more volatile than Arthavest Tbk. It trades about -0.01 of its potential returns per unit of risk. Arthavest Tbk is currently generating about -0.08 per unit of risk. If you would invest 405,000 in Vale Indonesia Tbk on August 27, 2024 and sell it today you would lose (39,000) from holding Vale Indonesia Tbk or give up 9.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale Indonesia Tbk vs. Arthavest Tbk
Performance |
| Timeline |
| Vale Indonesia Tbk |
| Arthavest Tbk |
Vale Indonesia and Arthavest Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale Indonesia and Arthavest Tbk
The main advantage of trading using opposite Vale Indonesia and Arthavest Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale Indonesia position performs unexpectedly, Arthavest Tbk 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 Arthavest Tbk will offset losses from the drop in Arthavest Tbk's long position.| Vale Indonesia vs. Kedaung Indah Can | Vale Indonesia vs. Langgeng Makmur Industri | Vale Indonesia vs. Kabelindo Murni Tbk | Vale Indonesia vs. Mustika Ratu Tbk |
| Arthavest Tbk vs. Asuransi Bintang Tbk | Arthavest Tbk vs. Pacific Strategic Financial | Arthavest Tbk vs. Maming Enam Sembilan | Arthavest Tbk vs. Asuransi Harta Aman |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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