Correlation Between Kedaung Indah and Kedawung Setia
Can any of the company-specific risk be diversified away by investing in both Kedaung Indah and Kedawung Setia 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 Kedawung Setia 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 Kedawung Setia Industrial, you can compare the effects of market volatilities on Kedaung Indah and Kedawung Setia 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 Kedawung Setia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedaung Indah and Kedawung Setia.
Diversification Opportunities for Kedaung Indah and Kedawung Setia
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kedaung and Kedawung is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kedaung Indah Can and Kedawung Setia Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kedawung Setia Industrial 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 Kedawung Setia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kedawung Setia Industrial has no effect on the direction of Kedaung Indah i.e., Kedaung Indah and Kedawung Setia go up and down completely randomly.
Pair Corralation between Kedaung Indah and Kedawung Setia
Assuming the 90 days trading horizon Kedaung Indah Can is expected to under-perform the Kedawung Setia. But the stock apears to be less risky and, when comparing its historical volatility, Kedaung Indah Can is 1.28 times less risky than Kedawung Setia. The stock trades about -0.19 of its potential returns per unit of risk. The Kedawung Setia Industrial is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 48,250 in Kedawung Setia Industrial on August 24, 2024 and sell it today you would lose (4,450) from holding Kedawung Setia Industrial or give up 9.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kedaung Indah Can vs. Kedawung Setia Industrial
Performance |
| Timeline |
| Kedaung Indah Can |
| Kedawung Setia Industrial |
Kedaung Indah and Kedawung Setia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kedaung Indah and Kedawung Setia
The main advantage of trading using opposite Kedaung Indah and Kedawung Setia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kedaung Indah position performs unexpectedly, Kedawung Setia 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 Kedawung Setia will offset losses from the drop in Kedawung Setia'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 |
| Kedawung Setia vs. Kedaung Indah Can | Kedawung Setia vs. Langgeng Makmur Industri | Kedawung Setia vs. Kabelindo Murni Tbk | Kedawung Setia 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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