Correlation Between Indocement Tunggal and Japfa Comfeed
Can any of the company-specific risk be diversified away by investing in both Indocement Tunggal and Japfa Comfeed 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 Japfa Comfeed 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 Japfa Comfeed Indonesia, you can compare the effects of market volatilities on Indocement Tunggal and Japfa Comfeed 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 Japfa Comfeed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indocement Tunggal and Japfa Comfeed.
Diversification Opportunities for Indocement Tunggal and Japfa Comfeed
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Indocement and Japfa is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Indocement Tunggal Prakarsa and Japfa Comfeed Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japfa Comfeed Indonesia 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 Japfa Comfeed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japfa Comfeed Indonesia has no effect on the direction of Indocement Tunggal i.e., Indocement Tunggal and Japfa Comfeed go up and down completely randomly.
Pair Corralation between Indocement Tunggal and Japfa Comfeed
Assuming the 90 days trading horizon Indocement Tunggal Prakarsa is expected to under-perform the Japfa Comfeed. But the stock apears to be less risky and, when comparing its historical volatility, Indocement Tunggal Prakarsa is 1.73 times less risky than Japfa Comfeed. The stock trades about -0.23 of its potential returns per unit of risk. The Japfa Comfeed Indonesia is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 166,500 in Japfa Comfeed Indonesia on August 28, 2024 and sell it today you would earn a total of 12,000 from holding Japfa Comfeed Indonesia or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indocement Tunggal Prakarsa vs. Japfa Comfeed Indonesia
Performance |
| Timeline |
| Indocement Tunggal |
| Japfa Comfeed Indonesia |
Indocement Tunggal and Japfa Comfeed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indocement Tunggal and Japfa Comfeed
The main advantage of trading using opposite Indocement Tunggal and Japfa Comfeed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indocement Tunggal position performs unexpectedly, Japfa Comfeed 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 Japfa Comfeed will offset losses from the drop in Japfa Comfeed's long position.| Indocement Tunggal vs. Kedaung Indah Can | Indocement Tunggal vs. Langgeng Makmur Industri | Indocement Tunggal vs. Kabelindo Murni Tbk | Indocement Tunggal vs. Mustika Ratu 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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