Correlation Between Indonesian Tobacco and Cipta Selera
Can any of the company-specific risk be diversified away by investing in both Indonesian Tobacco and Cipta Selera 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 Indonesian Tobacco and Cipta Selera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indonesian Tobacco Tbk and Cipta Selera Murni, you can compare the effects of market volatilities on Indonesian Tobacco and Cipta Selera 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 Indonesian Tobacco with a short position of Cipta Selera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indonesian Tobacco and Cipta Selera.
Diversification Opportunities for Indonesian Tobacco and Cipta Selera
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Indonesian and Cipta is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Indonesian Tobacco Tbk and Cipta Selera Murni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipta Selera Murni and Indonesian Tobacco 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 Indonesian Tobacco Tbk are associated (or correlated) with Cipta Selera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipta Selera Murni has no effect on the direction of Indonesian Tobacco i.e., Indonesian Tobacco and Cipta Selera go up and down completely randomly.
Pair Corralation between Indonesian Tobacco and Cipta Selera
Assuming the 90 days trading horizon Indonesian Tobacco Tbk is expected to under-perform the Cipta Selera. In addition to that, Indonesian Tobacco is 1.07 times more volatile than Cipta Selera Murni. It trades about -0.01 of its total potential returns per unit of risk. Cipta Selera Murni is currently generating about 0.01 per unit of volatility. If you would invest 315,000 in Cipta Selera Murni on November 19, 2024 and sell it today you would earn a total of 5,000 from holding Cipta Selera Murni or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indonesian Tobacco Tbk vs. Cipta Selera Murni
Performance |
| Timeline |
| Indonesian Tobacco Tbk |
| Cipta Selera Murni |
Indonesian Tobacco and Cipta Selera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indonesian Tobacco and Cipta Selera
The main advantage of trading using opposite Indonesian Tobacco and Cipta Selera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indonesian Tobacco position performs unexpectedly, Cipta Selera 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 Cipta Selera will offset losses from the drop in Cipta Selera's long position.| Indonesian Tobacco vs. Wismilak Inti Makmur | Indonesian Tobacco vs. J Resources Asia | Indonesian Tobacco vs. Transcoal Pacific Tbk | Indonesian Tobacco vs. Garudafood Putra Putri |
| Cipta Selera vs. Garuda Metalindo Tbk | Cipta Selera vs. Panin Financial Tbk | Cipta Selera vs. Equity Development Investment | Cipta Selera vs. Optima Prima Metal |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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