Correlation Between Indah Kiat and Darma Henwa
Can any of the company-specific risk be diversified away by investing in both Indah Kiat and Darma Henwa 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 Darma Henwa 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 Darma Henwa Tbk, you can compare the effects of market volatilities on Indah Kiat and Darma Henwa 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 Darma Henwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indah Kiat and Darma Henwa.
Diversification Opportunities for Indah Kiat and Darma Henwa
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Indah and Darma is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Indah Kiat Pulp and Darma Henwa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darma Henwa 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 Darma Henwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darma Henwa Tbk has no effect on the direction of Indah Kiat i.e., Indah Kiat and Darma Henwa go up and down completely randomly.
Pair Corralation between Indah Kiat and Darma Henwa
Assuming the 90 days trading horizon Indah Kiat Pulp is expected to under-perform the Darma Henwa. But the stock apears to be less risky and, when comparing its historical volatility, Indah Kiat Pulp is 1.91 times less risky than Darma Henwa. The stock trades about -0.02 of its potential returns per unit of risk. The Darma Henwa Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,600 in Darma Henwa Tbk on September 1, 2024 and sell it today you would earn a total of 2,000 from holding Darma Henwa Tbk or generate 23.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indah Kiat Pulp vs. Darma Henwa Tbk
Performance |
| Timeline |
| Indah Kiat Pulp |
| Darma Henwa Tbk |
Indah Kiat and Darma Henwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indah Kiat and Darma Henwa
The main advantage of trading using opposite Indah Kiat and Darma Henwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indah Kiat position performs unexpectedly, Darma Henwa 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 Darma Henwa will offset losses from the drop in Darma Henwa's long position.| Indah Kiat vs. Perusahaan Gas Negara | Indah Kiat vs. Telkom Indonesia Tbk | Indah Kiat vs. Mitra Pinasthika Mustika | Indah Kiat vs. Jakarta Int Hotels |
| Darma Henwa vs. Bakrieland Development Tbk | Darma Henwa vs. Energi Mega Persada | Darma Henwa vs. Bakrie Brothers Tbk | Darma Henwa vs. Bakrie Sumatera Plantations |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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