Correlation Between Indorama Synthetics and Rig Tenders
Can any of the company-specific risk be diversified away by investing in both Indorama Synthetics and Rig Tenders 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 Rig Tenders 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 Rig Tenders Tbk, you can compare the effects of market volatilities on Indorama Synthetics and Rig Tenders 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 Rig Tenders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indorama Synthetics and Rig Tenders.
Diversification Opportunities for Indorama Synthetics and Rig Tenders
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indorama and Rig is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Indorama Synthetics Tbk and Rig Tenders Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rig Tenders 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 Rig Tenders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rig Tenders Tbk has no effect on the direction of Indorama Synthetics i.e., Indorama Synthetics and Rig Tenders go up and down completely randomly.
Pair Corralation between Indorama Synthetics and Rig Tenders
Assuming the 90 days trading horizon Indorama Synthetics Tbk is expected to under-perform the Rig Tenders. But the stock apears to be less risky and, when comparing its historical volatility, Indorama Synthetics Tbk is 1.25 times less risky than Rig Tenders. The stock trades about -0.02 of its potential returns per unit of risk. The Rig Tenders Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 49,600 in Rig Tenders Tbk on September 2, 2024 and sell it today you would earn a total of 10,400 from holding Rig Tenders Tbk or generate 20.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indorama Synthetics Tbk vs. Rig Tenders Tbk
Performance |
| Timeline |
| Indorama Synthetics Tbk |
| Rig Tenders Tbk |
Indorama Synthetics and Rig Tenders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indorama Synthetics and Rig Tenders
The main advantage of trading using opposite Indorama Synthetics and Rig Tenders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indorama Synthetics position performs unexpectedly, Rig Tenders 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 Rig Tenders will offset losses from the drop in Rig Tenders' 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 |
| Rig Tenders vs. Matahari Department Store | Rig Tenders vs. Multi Medika Internasional | Rig Tenders vs. Visi Media Asia | Rig Tenders vs. Bayan Resources 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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