Correlation Between Vale Indonesia and Inocycle Technology
Can any of the company-specific risk be diversified away by investing in both Vale Indonesia and Inocycle Technology 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 Inocycle Technology 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 Inocycle Technology Tbk, you can compare the effects of market volatilities on Vale Indonesia and Inocycle Technology 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 Inocycle Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale Indonesia and Inocycle Technology.
Diversification Opportunities for Vale Indonesia and Inocycle Technology
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vale and Inocycle is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vale Indonesia Tbk and Inocycle Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inocycle Technology 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 Inocycle Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inocycle Technology Tbk has no effect on the direction of Vale Indonesia i.e., Vale Indonesia and Inocycle Technology go up and down completely randomly.
Pair Corralation between Vale Indonesia and Inocycle Technology
Assuming the 90 days trading horizon Vale Indonesia Tbk is expected to under-perform the Inocycle Technology. But the stock apears to be less risky and, when comparing its historical volatility, Vale Indonesia Tbk is 1.22 times less risky than Inocycle Technology. The stock trades about -0.16 of its potential returns per unit of risk. The Inocycle Technology Tbk is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 10,300 in Inocycle Technology Tbk on September 2, 2024 and sell it today you would lose (300.00) from holding Inocycle Technology Tbk or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale Indonesia Tbk vs. Inocycle Technology Tbk
Performance |
| Timeline |
| Vale Indonesia Tbk |
| Inocycle Technology Tbk |
Vale Indonesia and Inocycle Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale Indonesia and Inocycle Technology
The main advantage of trading using opposite Vale Indonesia and Inocycle Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale Indonesia position performs unexpectedly, Inocycle Technology 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 Inocycle Technology will offset losses from the drop in Inocycle Technology's long position.| Vale Indonesia vs. Perusahaan Gas Negara | Vale Indonesia vs. Telkom Indonesia Tbk | Vale Indonesia vs. Mitra Pinasthika Mustika | Vale Indonesia vs. Jakarta Int Hotels |
| Inocycle Technology vs. MNC Vision Networks | Inocycle Technology vs. Hartadinata Abadi Tbk | Inocycle Technology vs. Kencana Energi Lestari | Inocycle Technology vs. Bali Bintang Sejahtera |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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