Correlation Between Kabelindo Murni and Vale Indonesia
Can any of the company-specific risk be diversified away by investing in both Kabelindo Murni and Vale Indonesia 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 Kabelindo Murni and Vale Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kabelindo Murni Tbk and Vale Indonesia Tbk, you can compare the effects of market volatilities on Kabelindo Murni and Vale Indonesia 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 Kabelindo Murni with a short position of Vale Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kabelindo Murni and Vale Indonesia.
Diversification Opportunities for Kabelindo Murni and Vale Indonesia
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kabelindo and Vale is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kabelindo Murni Tbk and Vale Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale Indonesia Tbk and Kabelindo Murni 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 Kabelindo Murni Tbk are associated (or correlated) with Vale Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale Indonesia Tbk has no effect on the direction of Kabelindo Murni i.e., Kabelindo Murni and Vale Indonesia go up and down completely randomly.
Pair Corralation between Kabelindo Murni and Vale Indonesia
Assuming the 90 days trading horizon Kabelindo Murni Tbk is expected to generate 0.94 times more return on investment than Vale Indonesia. However, Kabelindo Murni Tbk is 1.07 times less risky than Vale Indonesia. It trades about 0.02 of its potential returns per unit of risk. Vale Indonesia Tbk is currently generating about -0.07 per unit of risk. If you would invest 26,190 in Kabelindo Murni Tbk on November 19, 2024 and sell it today you would earn a total of 1,610 from holding Kabelindo Murni Tbk or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Kabelindo Murni Tbk vs. Vale Indonesia Tbk
Performance |
| Timeline |
| Kabelindo Murni Tbk |
| Vale Indonesia Tbk |
Kabelindo Murni and Vale Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kabelindo Murni and Vale Indonesia
The main advantage of trading using opposite Kabelindo Murni and Vale Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kabelindo Murni position performs unexpectedly, Vale Indonesia 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 Vale Indonesia will offset losses from the drop in Vale Indonesia's long position.| Kabelindo Murni vs. Kmi Wire And | Kabelindo Murni vs. Jembo Cable | Kabelindo Murni vs. Sumi Indo Kabel | Kabelindo Murni vs. Voksel Electric Tbk |
| Vale Indonesia vs. Timah Persero Tbk | Vale Indonesia vs. Aneka Tambang Persero | Vale Indonesia vs. Bukit Asam Tbk | Vale Indonesia vs. Perusahaan Gas Negara |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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