Correlation Between Vale Indonesia and Perusahaan Perkebunan
Can any of the company-specific risk be diversified away by investing in both Vale Indonesia and Perusahaan Perkebunan 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 Perusahaan Perkebunan 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 Perusahaan Perkebunan London, you can compare the effects of market volatilities on Vale Indonesia and Perusahaan Perkebunan 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 Perusahaan Perkebunan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale Indonesia and Perusahaan Perkebunan.
Diversification Opportunities for Vale Indonesia and Perusahaan Perkebunan
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vale and Perusahaan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vale Indonesia Tbk and Perusahaan Perkebunan London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perusahaan Perkebunan 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 Perusahaan Perkebunan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perusahaan Perkebunan has no effect on the direction of Vale Indonesia i.e., Vale Indonesia and Perusahaan Perkebunan go up and down completely randomly.
Pair Corralation between Vale Indonesia and Perusahaan Perkebunan
Assuming the 90 days trading horizon Vale Indonesia Tbk is expected to generate 0.59 times more return on investment than Perusahaan Perkebunan. However, Vale Indonesia Tbk is 1.69 times less risky than Perusahaan Perkebunan. It trades about -0.24 of its potential returns per unit of risk. Perusahaan Perkebunan London is currently generating about -0.29 per unit of risk. If you would invest 399,000 in Vale Indonesia Tbk on August 30, 2024 and sell it today you would lose (34,000) from holding Vale Indonesia Tbk or give up 8.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale Indonesia Tbk vs. Perusahaan Perkebunan London
Performance |
| Timeline |
| Vale Indonesia Tbk |
| Perusahaan Perkebunan |
Vale Indonesia and Perusahaan Perkebunan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale Indonesia and Perusahaan Perkebunan
The main advantage of trading using opposite Vale Indonesia and Perusahaan Perkebunan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale Indonesia position performs unexpectedly, Perusahaan Perkebunan 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 Perusahaan Perkebunan will offset losses from the drop in Perusahaan Perkebunan's long position.| Vale Indonesia vs. Timah Persero Tbk | Vale Indonesia vs. Aneka Tambang Persero | Vale Indonesia vs. Bukit Asam Tbk | Vale Indonesia vs. Perusahaan Gas Negara |
| Perusahaan Perkebunan vs. Astra Agro Lestari | Perusahaan Perkebunan vs. Vale Indonesia Tbk | Perusahaan Perkebunan vs. Timah Persero Tbk | Perusahaan Perkebunan vs. United Tractors 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |