Correlation Between Kedaung Indah and Kmi Wire
Can any of the company-specific risk be diversified away by investing in both Kedaung Indah and Kmi Wire 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 Kmi Wire 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 Kmi Wire And, you can compare the effects of market volatilities on Kedaung Indah and Kmi Wire 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 Kmi Wire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedaung Indah and Kmi Wire.
Diversification Opportunities for Kedaung Indah and Kmi Wire
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kedaung and Kmi is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Kedaung Indah Can and Kmi Wire And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kmi Wire And 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 Kmi Wire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kmi Wire And has no effect on the direction of Kedaung Indah i.e., Kedaung Indah and Kmi Wire go up and down completely randomly.
Pair Corralation between Kedaung Indah and Kmi Wire
Assuming the 90 days trading horizon Kedaung Indah Can is expected to under-perform the Kmi Wire. In addition to that, Kedaung Indah is 1.57 times more volatile than Kmi Wire And. It trades about -0.09 of its total potential returns per unit of risk. Kmi Wire And is currently generating about -0.03 per unit of volatility. If you would invest 40,000 in Kmi Wire And on August 30, 2024 and sell it today you would lose (1,200) from holding Kmi Wire And or give up 3.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kedaung Indah Can vs. Kmi Wire And
Performance |
| Timeline |
| Kedaung Indah Can |
| Kmi Wire And |
Kedaung Indah and Kmi Wire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kedaung Indah and Kmi Wire
The main advantage of trading using opposite Kedaung Indah and Kmi Wire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kedaung Indah position performs unexpectedly, Kmi Wire 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 Kmi Wire will offset losses from the drop in Kmi Wire's long position.| Kedaung Indah vs. Pembangunan Jaya Ancol | Kedaung Indah vs. Panorama Sentrawisata Tbk | Kedaung Indah vs. Millennium Pharmacon International | Kedaung Indah vs. Tempo Inti Media |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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