Correlation Between Hoffmen Cleanindo and Indo Acidatama
Can any of the company-specific risk be diversified away by investing in both Hoffmen Cleanindo and Indo Acidatama 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 Hoffmen Cleanindo and Indo Acidatama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hoffmen Cleanindo and Indo Acidatama Tbk, you can compare the effects of market volatilities on Hoffmen Cleanindo and Indo Acidatama 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 Hoffmen Cleanindo with a short position of Indo Acidatama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoffmen Cleanindo and Indo Acidatama.
Diversification Opportunities for Hoffmen Cleanindo and Indo Acidatama
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hoffmen and Indo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hoffmen Cleanindo and Indo Acidatama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Acidatama Tbk and Hoffmen Cleanindo 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 Hoffmen Cleanindo are associated (or correlated) with Indo Acidatama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Acidatama Tbk has no effect on the direction of Hoffmen Cleanindo i.e., Hoffmen Cleanindo and Indo Acidatama go up and down completely randomly.
Pair Corralation between Hoffmen Cleanindo and Indo Acidatama
Assuming the 90 days trading horizon Hoffmen Cleanindo is expected to generate 2.13 times more return on investment than Indo Acidatama. However, Hoffmen Cleanindo is 2.13 times more volatile than Indo Acidatama Tbk. It trades about -0.05 of its potential returns per unit of risk. Indo Acidatama Tbk is currently generating about -0.17 per unit of risk. If you would invest 16,900 in Hoffmen Cleanindo on August 24, 2024 and sell it today you would lose (500.00) from holding Hoffmen Cleanindo or give up 2.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hoffmen Cleanindo vs. Indo Acidatama Tbk
Performance |
| Timeline |
| Hoffmen Cleanindo |
| Indo Acidatama Tbk |
Hoffmen Cleanindo and Indo Acidatama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hoffmen Cleanindo and Indo Acidatama
The main advantage of trading using opposite Hoffmen Cleanindo and Indo Acidatama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hoffmen Cleanindo position performs unexpectedly, Indo Acidatama 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 Indo Acidatama will offset losses from the drop in Indo Acidatama's long position.| Hoffmen Cleanindo vs. Bank Central Asia | Hoffmen Cleanindo vs. Bank Rakyat Indonesia | Hoffmen Cleanindo vs. Bank Mandiri Persero | Hoffmen Cleanindo vs. Astra International Tbk |
| Indo Acidatama vs. Kedaung Indah Can | Indo Acidatama vs. Langgeng Makmur Industri | Indo Acidatama vs. Kabelindo Murni Tbk | Indo Acidatama vs. Champion Pacific 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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