Correlation Between Indosat Tbk and Sepatu Bata
Can any of the company-specific risk be diversified away by investing in both Indosat Tbk and Sepatu Bata 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 Indosat Tbk and Sepatu Bata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosat Tbk and Sepatu Bata Tbk, you can compare the effects of market volatilities on Indosat Tbk and Sepatu Bata 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 Indosat Tbk with a short position of Sepatu Bata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosat Tbk and Sepatu Bata.
Diversification Opportunities for Indosat Tbk and Sepatu Bata
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indosat and Sepatu is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Sepatu Bata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sepatu Bata Tbk and Indosat Tbk 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 Indosat Tbk are associated (or correlated) with Sepatu Bata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sepatu Bata Tbk has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Sepatu Bata go up and down completely randomly.
Pair Corralation between Indosat Tbk and Sepatu Bata
Assuming the 90 days trading horizon Indosat Tbk is expected to generate 1.78 times more return on investment than Sepatu Bata. However, Indosat Tbk is 1.78 times more volatile than Sepatu Bata Tbk. It trades about 0.22 of its potential returns per unit of risk. Sepatu Bata Tbk is currently generating about -0.25 per unit of risk. If you would invest 214,000 in Indosat Tbk on September 12, 2024 and sell it today you would earn a total of 31,000 from holding Indosat Tbk or generate 14.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indosat Tbk vs. Sepatu Bata Tbk
Performance |
| Timeline |
| Indosat Tbk |
| Sepatu Bata Tbk |
Indosat Tbk and Sepatu Bata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosat Tbk and Sepatu Bata
The main advantage of trading using opposite Indosat Tbk and Sepatu Bata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosat Tbk position performs unexpectedly, Sepatu Bata 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 Sepatu Bata will offset losses from the drop in Sepatu Bata's long position.| Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
| Sepatu Bata vs. Indo Kordsa Tbk | Sepatu Bata vs. Goodyear Indonesia Tbk | Sepatu Bata vs. Argo Pantes Tbk | Sepatu Bata vs. Primarindo Asia Infrastructure |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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