Correlation Between Indah Kiat and Barito Pacific
Can any of the company-specific risk be diversified away by investing in both Indah Kiat and Barito Pacific 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 Indah Kiat and Barito Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indah Kiat Pulp and Barito Pacific Tbk, you can compare the effects of market volatilities on Indah Kiat and Barito Pacific 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 Indah Kiat with a short position of Barito Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indah Kiat and Barito Pacific.
Diversification Opportunities for Indah Kiat and Barito Pacific
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Indah and Barito is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Indah Kiat Pulp and Barito Pacific Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barito Pacific Tbk and Indah Kiat 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 Indah Kiat Pulp are associated (or correlated) with Barito Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barito Pacific Tbk has no effect on the direction of Indah Kiat i.e., Indah Kiat and Barito Pacific go up and down completely randomly.
Pair Corralation between Indah Kiat and Barito Pacific
Assuming the 90 days trading horizon Indah Kiat Pulp is expected to under-perform the Barito Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Indah Kiat Pulp is 1.72 times less risky than Barito Pacific. The stock trades about -0.07 of its potential returns per unit of risk. The Barito Pacific Tbk is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 101,500 in Barito Pacific Tbk on November 3, 2024 and sell it today you would lose (9,000) from holding Barito Pacific Tbk or give up 8.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indah Kiat Pulp vs. Barito Pacific Tbk
Performance |
| Timeline |
| Indah Kiat Pulp |
| Barito Pacific Tbk |
Indah Kiat and Barito Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indah Kiat and Barito Pacific
The main advantage of trading using opposite Indah Kiat and Barito Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indah Kiat position performs unexpectedly, Barito Pacific 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 Barito Pacific will offset losses from the drop in Barito Pacific's long position.| Indah Kiat vs. Pabrik Kertas Tjiwi | Indah Kiat vs. Indocement Tunggal Prakarsa | Indah Kiat vs. Barito Pacific Tbk | Indah Kiat vs. United Tractors Tbk |
| Barito Pacific vs. Indah Kiat Pulp | Barito Pacific vs. Medco Energi Internasional | Barito Pacific vs. Vale Indonesia Tbk | Barito Pacific vs. Charoen Pokphand Indonesia |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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