Correlation Between Indorama Synthetics and Sepatu Bata
Can any of the company-specific risk be diversified away by investing in both Indorama Synthetics and Sepatu Bata 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 Sepatu Bata 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 Sepatu Bata Tbk, you can compare the effects of market volatilities on Indorama Synthetics and Sepatu Bata 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 Sepatu Bata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indorama Synthetics and Sepatu Bata.
Diversification Opportunities for Indorama Synthetics and Sepatu Bata
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indorama and Sepatu is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Indorama Synthetics Tbk and Sepatu Bata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sepatu Bata Tbk 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 Sepatu Bata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sepatu Bata Tbk has no effect on the direction of Indorama Synthetics i.e., Indorama Synthetics and Sepatu Bata go up and down completely randomly.
Pair Corralation between Indorama Synthetics and Sepatu Bata
Assuming the 90 days trading horizon Indorama Synthetics Tbk is expected to generate 0.9 times more return on investment than Sepatu Bata. However, Indorama Synthetics Tbk is 1.12 times less risky than Sepatu Bata. It trades about -0.08 of its potential returns per unit of risk. Sepatu Bata Tbk is currently generating about -0.17 per unit of risk. If you would invest 349,000 in Indorama Synthetics Tbk on August 25, 2024 and sell it today you would lose (87,000) from holding Indorama Synthetics Tbk or give up 24.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.44% |
| Values | Daily Returns |
Indorama Synthetics Tbk vs. Sepatu Bata Tbk
Performance |
| Timeline |
| Indorama Synthetics Tbk |
| Sepatu Bata Tbk |
Indorama Synthetics and Sepatu Bata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indorama Synthetics and Sepatu Bata
The main advantage of trading using opposite Indorama Synthetics and Sepatu Bata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indorama Synthetics position performs unexpectedly, Sepatu Bata 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 Sepatu Bata will offset losses from the drop in Sepatu Bata'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 |
| Sepatu Bata vs. Indo Kordsa Tbk | Sepatu Bata vs. Goodyear Indonesia Tbk | Sepatu Bata vs. Argo Pantes Tbk | Sepatu Bata vs. Primarindo Asia Infrastructure |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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