Correlation Between Kedaung Indah and Colorpak Indonesia
Can any of the company-specific risk be diversified away by investing in both Kedaung Indah and Colorpak 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 Kedaung Indah and Colorpak Indonesia 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 Colorpak Indonesia Tbk, you can compare the effects of market volatilities on Kedaung Indah and Colorpak 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 Kedaung Indah with a short position of Colorpak Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedaung Indah and Colorpak Indonesia.
Diversification Opportunities for Kedaung Indah and Colorpak Indonesia
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kedaung and Colorpak is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kedaung Indah Can and Colorpak Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colorpak Indonesia 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 Colorpak Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colorpak Indonesia Tbk has no effect on the direction of Kedaung Indah i.e., Kedaung Indah and Colorpak Indonesia go up and down completely randomly.
Pair Corralation between Kedaung Indah and Colorpak Indonesia
Assuming the 90 days trading horizon Kedaung Indah Can is expected to generate 7.83 times more return on investment than Colorpak Indonesia. However, Kedaung Indah is 7.83 times more volatile than Colorpak Indonesia Tbk. It trades about 0.03 of its potential returns per unit of risk. Colorpak Indonesia Tbk is currently generating about 0.08 per unit of risk. If you would invest 14,400 in Kedaung Indah Can on August 29, 2024 and sell it today you would lose (1,100) from holding Kedaung Indah Can or give up 7.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.57% |
| Values | Daily Returns |
Kedaung Indah Can vs. Colorpak Indonesia Tbk
Performance |
| Timeline |
| Kedaung Indah Can |
| Colorpak Indonesia Tbk |
Kedaung Indah and Colorpak Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kedaung Indah and Colorpak Indonesia
The main advantage of trading using opposite Kedaung Indah and Colorpak Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kedaung Indah position performs unexpectedly, Colorpak 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 Colorpak Indonesia will offset losses from the drop in Colorpak Indonesia's 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 |
| Colorpak Indonesia vs. Ekadharma International Tbk | Colorpak Indonesia vs. Enseval Putra Megatrading | Colorpak Indonesia vs. Duta Pertiwi Nusantara | Colorpak Indonesia vs. Wilmar Cahaya Indonesia |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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