Correlation Between James Hardie and PT Indocement
Can any of the company-specific risk be diversified away by investing in both James Hardie and PT Indocement 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 James Hardie and PT Indocement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James Hardie Industries and PT Indocement Tunggal, you can compare the effects of market volatilities on James Hardie and PT Indocement 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 James Hardie with a short position of PT Indocement. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Hardie and PT Indocement.
Diversification Opportunities for James Hardie and PT Indocement
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between James and PITPF is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding James Hardie Industries and PT Indocement Tunggal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indocement Tunggal and James Hardie 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 James Hardie Industries are associated (or correlated) with PT Indocement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indocement Tunggal has no effect on the direction of James Hardie i.e., James Hardie and PT Indocement go up and down completely randomly.
Pair Corralation between James Hardie and PT Indocement
If you would invest 3,190 in James Hardie Industries on September 1, 2024 and sell it today you would earn a total of 525.00 from holding James Hardie Industries or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
James Hardie Industries vs. PT Indocement Tunggal
Performance |
| Timeline |
| James Hardie Industries |
| PT Indocement Tunggal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
James Hardie and PT Indocement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James Hardie and PT Indocement
The main advantage of trading using opposite James Hardie and PT Indocement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Hardie position performs unexpectedly, PT Indocement 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 PT Indocement will offset losses from the drop in PT Indocement's long position.| James Hardie vs. Loma Negra Compania | James Hardie vs. Summit Materials | James Hardie vs. United States Lime | James Hardie vs. Eagle Materials |
| PT Indocement vs. Summit Materials | PT Indocement vs. Cementos Pacasmayo SAA | PT Indocement vs. James Hardie Industries | PT Indocement vs. United States Lime |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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