Correlation Between Kedaung Indah and Pabrik Kertas
Can any of the company-specific risk be diversified away by investing in both Kedaung Indah and Pabrik Kertas 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 Pabrik Kertas 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 Pabrik Kertas Tjiwi, you can compare the effects of market volatilities on Kedaung Indah and Pabrik Kertas 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 Pabrik Kertas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedaung Indah and Pabrik Kertas.
Diversification Opportunities for Kedaung Indah and Pabrik Kertas
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kedaung and Pabrik is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kedaung Indah Can and Pabrik Kertas Tjiwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pabrik Kertas Tjiwi 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 Pabrik Kertas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pabrik Kertas Tjiwi has no effect on the direction of Kedaung Indah i.e., Kedaung Indah and Pabrik Kertas go up and down completely randomly.
Pair Corralation between Kedaung Indah and Pabrik Kertas
Assuming the 90 days trading horizon Kedaung Indah Can is expected to generate 2.46 times more return on investment than Pabrik Kertas. However, Kedaung Indah is 2.46 times more volatile than Pabrik Kertas Tjiwi. It trades about 0.02 of its potential returns per unit of risk. Pabrik Kertas Tjiwi is currently generating about 0.0 per unit of risk. If you would invest 16,600 in Kedaung Indah Can on September 12, 2024 and sell it today you would lose (3,000) from holding Kedaung Indah Can or give up 18.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kedaung Indah Can vs. Pabrik Kertas Tjiwi
Performance |
| Timeline |
| Kedaung Indah Can |
| Pabrik Kertas Tjiwi |
Kedaung Indah and Pabrik Kertas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kedaung Indah and Pabrik Kertas
The main advantage of trading using opposite Kedaung Indah and Pabrik Kertas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kedaung Indah position performs unexpectedly, Pabrik Kertas 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 Pabrik Kertas will offset losses from the drop in Pabrik Kertas' long position.| Kedaung Indah vs. Pembangunan Graha Lestari | Kedaung Indah vs. Pembangunan Jaya Ancol | Kedaung Indah vs. Hotel Sahid Jaya | Kedaung Indah vs. Mitrabara Adiperdana PT |
| Pabrik Kertas vs. Kedaung Indah Can | Pabrik Kertas vs. Kabelindo Murni Tbk | Pabrik Kertas vs. Champion Pacific Indonesia | Pabrik Kertas vs. Bhuwanatala Indah Permai |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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