Correlation Between Indorama Synthetics and Tanah Laut
Can any of the company-specific risk be diversified away by investing in both Indorama Synthetics and Tanah Laut 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 Tanah Laut 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 Tanah Laut Tbk, you can compare the effects of market volatilities on Indorama Synthetics and Tanah Laut 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 Tanah Laut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indorama Synthetics and Tanah Laut.
Diversification Opportunities for Indorama Synthetics and Tanah Laut
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indorama and Tanah is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Indorama Synthetics Tbk and Tanah Laut Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanah Laut 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 Tanah Laut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tanah Laut Tbk has no effect on the direction of Indorama Synthetics i.e., Indorama Synthetics and Tanah Laut go up and down completely randomly.
Pair Corralation between Indorama Synthetics and Tanah Laut
Assuming the 90 days trading horizon Indorama Synthetics Tbk is expected to generate 0.56 times more return on investment than Tanah Laut. However, Indorama Synthetics Tbk is 1.78 times less risky than Tanah Laut. It trades about -0.05 of its potential returns per unit of risk. Tanah Laut Tbk is currently generating about -0.03 per unit of risk. If you would invest 411,208 in Indorama Synthetics Tbk on August 31, 2024 and sell it today you would lose (144,208) from holding Indorama Synthetics Tbk or give up 35.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Indorama Synthetics Tbk vs. Tanah Laut Tbk
Performance |
| Timeline |
| Indorama Synthetics Tbk |
| Tanah Laut Tbk |
Indorama Synthetics and Tanah Laut Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indorama Synthetics and Tanah Laut
The main advantage of trading using opposite Indorama Synthetics and Tanah Laut positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indorama Synthetics position performs unexpectedly, Tanah Laut 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 Tanah Laut will offset losses from the drop in Tanah Laut's long position.| Indorama Synthetics vs. Japfa Comfeed Indonesia | Indorama Synthetics vs. Charoen Pokphand Indonesia | Indorama Synthetics vs. Erajaya Swasembada Tbk | Indorama Synthetics vs. Indofood Cbp Sukses |
| Tanah Laut vs. Inter Delta Tbk | Tanah Laut vs. Humpuss Intermoda Transportasi | Tanah Laut vs. Fortune Indonesia Tbk | Tanah Laut vs. PT MNC Energy |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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