Correlation Between Kencana Energi and PT Indonesia
Can any of the company-specific risk be diversified away by investing in both Kencana Energi and PT 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 Kencana Energi and PT Indonesia 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 PT Indonesia Kendaraan, you can compare the effects of market volatilities on Kencana Energi and PT 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 Kencana Energi with a short position of PT Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kencana Energi and PT Indonesia.
Diversification Opportunities for Kencana Energi and PT Indonesia
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kencana and IPCC is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Kencana Energi Lestari and PT Indonesia Kendaraan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indonesia Kendaraan 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 PT Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indonesia Kendaraan has no effect on the direction of Kencana Energi i.e., Kencana Energi and PT Indonesia go up and down completely randomly.
Pair Corralation between Kencana Energi and PT Indonesia
Assuming the 90 days trading horizon Kencana Energi Lestari is expected to under-perform the PT Indonesia. In addition to that, Kencana Energi is 1.07 times more volatile than PT Indonesia Kendaraan. It trades about -0.14 of its total potential returns per unit of risk. PT Indonesia Kendaraan is currently generating about 0.16 per unit of volatility. If you would invest 67,500 in PT Indonesia Kendaraan on September 2, 2024 and sell it today you would earn a total of 6,500 from holding PT Indonesia Kendaraan or generate 9.63% 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. PT Indonesia Kendaraan
Performance |
| Timeline |
| Kencana Energi Lestari |
| PT Indonesia Kendaraan |
Kencana Energi and PT Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kencana Energi and PT Indonesia
The main advantage of trading using opposite Kencana Energi and PT Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kencana Energi position performs unexpectedly, PT 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 PT Indonesia will offset losses from the drop in PT Indonesia'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 |
| PT Indonesia vs. Guna Timur Raya | PT Indonesia vs. Satria Antaran Prima | PT Indonesia vs. Transcoal Pacific Tbk | PT Indonesia vs. Pelayaran Nelly Dwi |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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