Correlation Between Indocement Tunggal and Steel Pipe
Can any of the company-specific risk be diversified away by investing in both Indocement Tunggal and Steel Pipe 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 Indocement Tunggal and Steel Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indocement Tunggal Prakarsa and Steel Pipe Industry, you can compare the effects of market volatilities on Indocement Tunggal and Steel Pipe 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 Indocement Tunggal with a short position of Steel Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indocement Tunggal and Steel Pipe.
Diversification Opportunities for Indocement Tunggal and Steel Pipe
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Indocement and Steel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Indocement Tunggal Prakarsa and Steel Pipe Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Pipe Industry and Indocement Tunggal 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 Indocement Tunggal Prakarsa are associated (or correlated) with Steel Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Pipe Industry has no effect on the direction of Indocement Tunggal i.e., Indocement Tunggal and Steel Pipe go up and down completely randomly.
Pair Corralation between Indocement Tunggal and Steel Pipe
Assuming the 90 days trading horizon Indocement Tunggal Prakarsa is expected to under-perform the Steel Pipe. In addition to that, Indocement Tunggal is 2.0 times more volatile than Steel Pipe Industry. It trades about -0.22 of its total potential returns per unit of risk. Steel Pipe Industry is currently generating about -0.37 per unit of volatility. If you would invest 30,400 in Steel Pipe Industry on August 29, 2024 and sell it today you would lose (2,000) from holding Steel Pipe Industry or give up 6.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indocement Tunggal Prakarsa vs. Steel Pipe Industry
Performance |
| Timeline |
| Indocement Tunggal |
| Steel Pipe Industry |
Indocement Tunggal and Steel Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indocement Tunggal and Steel Pipe
The main advantage of trading using opposite Indocement Tunggal and Steel Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indocement Tunggal position performs unexpectedly, Steel Pipe 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 Steel Pipe will offset losses from the drop in Steel Pipe's long position.| Indocement Tunggal vs. Semen Indonesia Persero | Indocement Tunggal vs. United Tractors Tbk | Indocement Tunggal vs. PT Indofood Sukses | Indocement Tunggal vs. Kalbe Farma Tbk |
| Steel Pipe vs. Barito Pacific Tbk | Steel Pipe vs. Charoen Pokphand Indonesia | Steel Pipe vs. Indocement Tunggal Prakarsa |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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