Correlation Between Tanah Laut and Indorama Synthetics
Can any of the company-specific risk be diversified away by investing in both Tanah Laut and Indorama Synthetics 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 Tanah Laut and Indorama Synthetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tanah Laut Tbk and Indorama Synthetics Tbk, you can compare the effects of market volatilities on Tanah Laut and Indorama Synthetics 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 Tanah Laut with a short position of Indorama Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tanah Laut and Indorama Synthetics.
Diversification Opportunities for Tanah Laut and Indorama Synthetics
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tanah and Indorama is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tanah Laut Tbk and Indorama Synthetics Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Synthetics Tbk and Tanah Laut 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 Tanah Laut Tbk are associated (or correlated) with Indorama Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Synthetics Tbk has no effect on the direction of Tanah Laut i.e., Tanah Laut and Indorama Synthetics go up and down completely randomly.
Pair Corralation between Tanah Laut and Indorama Synthetics
Assuming the 90 days trading horizon Tanah Laut Tbk is expected to under-perform the Indorama Synthetics. In addition to that, Tanah Laut is 1.18 times more volatile than Indorama Synthetics Tbk. It trades about -0.18 of its total potential returns per unit of risk. Indorama Synthetics Tbk is currently generating about -0.15 per unit of volatility. If you would invest 293,000 in Indorama Synthetics Tbk on September 2, 2024 and sell it today you would lose (16,000) from holding Indorama Synthetics Tbk or give up 5.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tanah Laut Tbk vs. Indorama Synthetics Tbk
Performance |
| Timeline |
| Tanah Laut Tbk |
| Indorama Synthetics Tbk |
Tanah Laut and Indorama Synthetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tanah Laut and Indorama Synthetics
The main advantage of trading using opposite Tanah Laut and Indorama Synthetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tanah Laut position performs unexpectedly, Indorama Synthetics 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 Indorama Synthetics will offset losses from the drop in Indorama Synthetics' long position.| Tanah Laut vs. Matahari Department Store | Tanah Laut vs. Multi Medika Internasional | Tanah Laut vs. Visi Media Asia | Tanah Laut vs. Bayan Resources Tbk |
| Indorama Synthetics vs. Japfa Comfeed Indonesia | Indorama Synthetics vs. Charoen Pokphand Indonesia | Indorama Synthetics vs. Erajaya Swasembada Tbk | Indorama Synthetics vs. Indofood Cbp Sukses |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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