Correlation Between Itama Ranoraya and Prodia Widyahusada
Can any of the company-specific risk be diversified away by investing in both Itama Ranoraya and Prodia Widyahusada 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 Itama Ranoraya and Prodia Widyahusada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itama Ranoraya and Prodia Widyahusada Tbk, you can compare the effects of market volatilities on Itama Ranoraya and Prodia Widyahusada 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 Itama Ranoraya with a short position of Prodia Widyahusada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itama Ranoraya and Prodia Widyahusada.
Diversification Opportunities for Itama Ranoraya and Prodia Widyahusada
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Itama and Prodia is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Itama Ranoraya and Prodia Widyahusada Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prodia Widyahusada Tbk and Itama Ranoraya 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 Itama Ranoraya are associated (or correlated) with Prodia Widyahusada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prodia Widyahusada Tbk has no effect on the direction of Itama Ranoraya i.e., Itama Ranoraya and Prodia Widyahusada go up and down completely randomly.
Pair Corralation between Itama Ranoraya and Prodia Widyahusada
Assuming the 90 days trading horizon Itama Ranoraya is expected to under-perform the Prodia Widyahusada. But the stock apears to be less risky and, when comparing its historical volatility, Itama Ranoraya is 1.33 times less risky than Prodia Widyahusada. The stock trades about -0.48 of its potential returns per unit of risk. The Prodia Widyahusada Tbk is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest 299,000 in Prodia Widyahusada Tbk on September 1, 2024 and sell it today you would lose (23,000) from holding Prodia Widyahusada Tbk or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itama Ranoraya vs. Prodia Widyahusada Tbk
Performance |
| Timeline |
| Itama Ranoraya |
| Prodia Widyahusada Tbk |
Itama Ranoraya and Prodia Widyahusada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itama Ranoraya and Prodia Widyahusada
The main advantage of trading using opposite Itama Ranoraya and Prodia Widyahusada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itama Ranoraya position performs unexpectedly, Prodia Widyahusada 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 Prodia Widyahusada will offset losses from the drop in Prodia Widyahusada's long position.| Itama Ranoraya vs. Kimia Farma Persero | Itama Ranoraya vs. Indofarma Tbk | Itama Ranoraya vs. Bank BRISyariah Tbk | Itama Ranoraya vs. Bank Rakyat Indonesia |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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