Correlation Between Kedaung Indah and Asiaplast Industries
Can any of the company-specific risk be diversified away by investing in both Kedaung Indah and Asiaplast Industries 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 Kedaung Indah and Asiaplast Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kedaung Indah Can and Asiaplast Industries Tbk, you can compare the effects of market volatilities on Kedaung Indah and Asiaplast Industries 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 Kedaung Indah with a short position of Asiaplast Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedaung Indah and Asiaplast Industries.
Diversification Opportunities for Kedaung Indah and Asiaplast Industries
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kedaung and Asiaplast is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kedaung Indah Can and Asiaplast Industries Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiaplast Industries Tbk and Kedaung Indah 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 Kedaung Indah Can are associated (or correlated) with Asiaplast Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiaplast Industries Tbk has no effect on the direction of Kedaung Indah i.e., Kedaung Indah and Asiaplast Industries go up and down completely randomly.
Pair Corralation between Kedaung Indah and Asiaplast Industries
Assuming the 90 days trading horizon Kedaung Indah Can is expected to under-perform the Asiaplast Industries. But the stock apears to be less risky and, when comparing its historical volatility, Kedaung Indah Can is 1.46 times less risky than Asiaplast Industries. The stock trades about -0.4 of its potential returns per unit of risk. The Asiaplast Industries Tbk is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 56,500 in Asiaplast Industries Tbk on August 28, 2024 and sell it today you would lose (2,500) from holding Asiaplast Industries Tbk or give up 4.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kedaung Indah Can vs. Asiaplast Industries Tbk
Performance |
| Timeline |
| Kedaung Indah Can |
| Asiaplast Industries Tbk |
Kedaung Indah and Asiaplast Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kedaung Indah and Asiaplast Industries
The main advantage of trading using opposite Kedaung Indah and Asiaplast Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kedaung Indah position performs unexpectedly, Asiaplast Industries 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 Asiaplast Industries will offset losses from the drop in Asiaplast Industries' long position.| Kedaung Indah vs. Langgeng Makmur Industri | Kedaung Indah vs. Kedawung Setia Industrial | Kedaung Indah vs. Mustika Ratu Tbk | Kedaung Indah vs. Kabelindo Murni Tbk |
| Asiaplast Industries vs. Kedaung Indah Can | Asiaplast Industries vs. Langgeng Makmur Industri | Asiaplast Industries vs. Kabelindo Murni Tbk | Asiaplast Industries vs. Mustika Ratu Tbk |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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