Correlation Between Indorama Synthetics and Alumindo Light
Can any of the company-specific risk be diversified away by investing in both Indorama Synthetics 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 Indorama Synthetics and Alumindo Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indorama Synthetics Tbk and Alumindo Light Metal, you can compare the effects of market volatilities on Indorama Synthetics 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 Indorama Synthetics with a short position of Alumindo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indorama Synthetics and Alumindo Light.
Diversification Opportunities for Indorama Synthetics and Alumindo Light
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Indorama and Alumindo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Indorama Synthetics Tbk 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 Indorama Synthetics 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 Indorama Synthetics Tbk 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 Indorama Synthetics i.e., Indorama Synthetics and Alumindo Light go up and down completely randomly.
Pair Corralation between Indorama Synthetics and Alumindo Light
Assuming the 90 days trading horizon Indorama Synthetics Tbk is expected to under-perform the Alumindo Light. But the stock apears to be less risky and, when comparing its historical volatility, Indorama Synthetics Tbk is 1.49 times less risky than Alumindo Light. The stock trades about -0.28 of its potential returns per unit of risk. The Alumindo Light Metal is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,600 in Alumindo Light Metal on August 30, 2024 and sell it today you would earn a total of 800.00 from holding Alumindo Light Metal or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indorama Synthetics Tbk vs. Alumindo Light Metal
Performance |
| Timeline |
| Indorama Synthetics Tbk |
| Alumindo Light Metal |
Indorama Synthetics and Alumindo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indorama Synthetics and Alumindo Light
The main advantage of trading using opposite Indorama Synthetics and Alumindo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indorama Synthetics 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.| Indorama Synthetics vs. Indospring Tbk | Indorama Synthetics vs. Indomobil Sukses Internasional | Indorama Synthetics vs. Sumi Indo Kabel | Indorama Synthetics vs. Goodyear Indonesia Tbk |
| Alumindo Light vs. Barito Pacific Tbk | Alumindo Light vs. Charoen Pokphand Indonesia | Alumindo Light vs. Indocement Tunggal Prakarsa |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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