Correlation Between Kencana Energi and Indonesia Fibreboard
Can any of the company-specific risk be diversified away by investing in both Kencana Energi and Indonesia Fibreboard 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 Kencana Energi and Indonesia Fibreboard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kencana Energi Lestari and Indonesia Fibreboard Industry, you can compare the effects of market volatilities on Kencana Energi and Indonesia Fibreboard 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 Kencana Energi with a short position of Indonesia Fibreboard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kencana Energi and Indonesia Fibreboard.
Diversification Opportunities for Kencana Energi and Indonesia Fibreboard
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kencana and Indonesia is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kencana Energi Lestari and Indonesia Fibreboard Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesia Fibreboard and Kencana Energi 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 Kencana Energi Lestari are associated (or correlated) with Indonesia Fibreboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesia Fibreboard has no effect on the direction of Kencana Energi i.e., Kencana Energi and Indonesia Fibreboard go up and down completely randomly.
Pair Corralation between Kencana Energi and Indonesia Fibreboard
Assuming the 90 days trading horizon Kencana Energi Lestari is expected to under-perform the Indonesia Fibreboard. But the stock apears to be less risky and, when comparing its historical volatility, Kencana Energi Lestari is 2.2 times less risky than Indonesia Fibreboard. The stock trades about -0.04 of its potential returns per unit of risk. The Indonesia Fibreboard Industry is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 19,900 in Indonesia Fibreboard Industry on September 14, 2024 and sell it today you would earn a total of 1,300 from holding Indonesia Fibreboard Industry or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kencana Energi Lestari vs. Indonesia Fibreboard Industry
Performance |
| Timeline |
| Kencana Energi Lestari |
| Indonesia Fibreboard |
Kencana Energi and Indonesia Fibreboard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kencana Energi and Indonesia Fibreboard
The main advantage of trading using opposite Kencana Energi and Indonesia Fibreboard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kencana Energi position performs unexpectedly, Indonesia Fibreboard 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 Indonesia Fibreboard will offset losses from the drop in Indonesia Fibreboard's long position.| Kencana Energi vs. PT Indonesia Kendaraan | Kencana Energi vs. Cikarang Listrindo Tbk | Kencana Energi vs. Jasa Armada Indonesia | Kencana Energi vs. Pelita Samudera Shipping |
| Indonesia Fibreboard vs. Gunung Raja Paksi | Indonesia Fibreboard vs. Satyamitra Kemas Lestari | Indonesia Fibreboard vs. Ifishdeco PT | Indonesia Fibreboard vs. Saraswanti Anugerah Makmur |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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