Correlation Between Indosat Tbk and Indorama Synthetics
Can any of the company-specific risk be diversified away by investing in both Indosat Tbk and Indorama Synthetics 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 Indorama Synthetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosat Tbk and Indorama Synthetics Tbk, you can compare the effects of market volatilities on Indosat Tbk and Indorama Synthetics 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 Indorama Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosat Tbk and Indorama Synthetics.
Diversification Opportunities for Indosat Tbk and Indorama Synthetics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indosat and Indorama is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Indorama Synthetics Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Synthetics 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 Indorama Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Synthetics Tbk has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Indorama Synthetics go up and down completely randomly.
Pair Corralation between Indosat Tbk and Indorama Synthetics
Assuming the 90 days trading horizon Indosat Tbk is expected to under-perform the Indorama Synthetics. In addition to that, Indosat Tbk is 4.42 times more volatile than Indorama Synthetics Tbk. It trades about -0.13 of its total potential returns per unit of risk. Indorama Synthetics Tbk is currently generating about -0.15 per unit of volatility. If you would invest 350,000 in Indorama Synthetics Tbk on September 12, 2024 and sell it today you would lose (72,000) from holding Indorama Synthetics Tbk or give up 20.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indosat Tbk vs. Indorama Synthetics Tbk
Performance |
| Timeline |
| Indosat Tbk |
| Indorama Synthetics Tbk |
Indosat Tbk and Indorama Synthetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosat Tbk and Indorama Synthetics
The main advantage of trading using opposite Indosat Tbk and Indorama Synthetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosat Tbk position performs unexpectedly, Indorama Synthetics 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 Indorama Synthetics will offset losses from the drop in Indorama Synthetics' long position.| Indosat Tbk vs. Mnc Land Tbk | Indosat Tbk vs. MNC Vision Networks | Indosat Tbk vs. MD Pictures Tbk | Indosat Tbk vs. Link Net Tbk |
| Indorama Synthetics vs. Indospring Tbk | Indorama Synthetics vs. Indomobil Sukses Internasional | Indorama Synthetics vs. Sumi Indo Kabel | Indorama Synthetics vs. Goodyear Indonesia 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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