Correlation Between Resource Alam and Cikarang Listrindo
Can any of the company-specific risk be diversified away by investing in both Resource Alam and Cikarang Listrindo 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 Resource Alam and Cikarang Listrindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resource Alam Indonesia and Cikarang Listrindo Tbk, you can compare the effects of market volatilities on Resource Alam and Cikarang Listrindo 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 Resource Alam with a short position of Cikarang Listrindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource Alam and Cikarang Listrindo.
Diversification Opportunities for Resource Alam and Cikarang Listrindo
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Resource and Cikarang is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Resource Alam Indonesia and Cikarang Listrindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cikarang Listrindo Tbk and Resource Alam 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 Resource Alam Indonesia are associated (or correlated) with Cikarang Listrindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cikarang Listrindo Tbk has no effect on the direction of Resource Alam i.e., Resource Alam and Cikarang Listrindo go up and down completely randomly.
Pair Corralation between Resource Alam and Cikarang Listrindo
Assuming the 90 days trading horizon Resource Alam Indonesia is expected to under-perform the Cikarang Listrindo. In addition to that, Resource Alam is 2.7 times more volatile than Cikarang Listrindo Tbk. It trades about -0.18 of its total potential returns per unit of risk. Cikarang Listrindo Tbk is currently generating about 0.08 per unit of volatility. If you would invest 70,000 in Cikarang Listrindo Tbk on August 31, 2024 and sell it today you would earn a total of 1,000.00 from holding Cikarang Listrindo Tbk or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resource Alam Indonesia vs. Cikarang Listrindo Tbk
Performance |
| Timeline |
| Resource Alam Indonesia |
| Cikarang Listrindo Tbk |
Resource Alam and Cikarang Listrindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resource Alam and Cikarang Listrindo
The main advantage of trading using opposite Resource Alam and Cikarang Listrindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resource Alam position performs unexpectedly, Cikarang Listrindo 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 Cikarang Listrindo will offset losses from the drop in Cikarang Listrindo's long position.| Resource Alam vs. Petrosea Tbk | Resource Alam vs. Harum Energy Tbk | Resource Alam vs. Perdana Karya Perkasa | Resource Alam vs. Bayan Resources Tbk |
| Cikarang Listrindo vs. Puradelta Lestari PT | Cikarang Listrindo vs. Mitra Pinasthika Mustika | Cikarang Listrindo vs. Wijaya Karya Bangunan | Cikarang Listrindo vs. PT Sarana Menara |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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