Correlation Between Ladangbaja Murni and Indo Oil
Can any of the company-specific risk be diversified away by investing in both Ladangbaja Murni and Indo Oil 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 Ladangbaja Murni and Indo Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ladangbaja Murni PT and Indo Oil Perkasa, you can compare the effects of market volatilities on Ladangbaja Murni and Indo Oil 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 Ladangbaja Murni with a short position of Indo Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladangbaja Murni and Indo Oil.
Diversification Opportunities for Ladangbaja Murni and Indo Oil
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ladangbaja and Indo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ladangbaja Murni PT and Indo Oil Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Oil Perkasa and Ladangbaja Murni 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 Ladangbaja Murni PT are associated (or correlated) with Indo Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Oil Perkasa has no effect on the direction of Ladangbaja Murni i.e., Ladangbaja Murni and Indo Oil go up and down completely randomly.
Pair Corralation between Ladangbaja Murni and Indo Oil
Assuming the 90 days trading horizon Ladangbaja Murni PT is expected to generate 2.06 times more return on investment than Indo Oil. However, Ladangbaja Murni is 2.06 times more volatile than Indo Oil Perkasa. It trades about 0.11 of its potential returns per unit of risk. Indo Oil Perkasa is currently generating about 0.07 per unit of risk. If you would invest 14,600 in Ladangbaja Murni PT on August 31, 2024 and sell it today you would earn a total of 16,400 from holding Ladangbaja Murni PT or generate 112.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ladangbaja Murni PT vs. Indo Oil Perkasa
Performance |
| Timeline |
| Ladangbaja Murni |
| Indo Oil Perkasa |
Ladangbaja Murni and Indo Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ladangbaja Murni and Indo Oil
The main advantage of trading using opposite Ladangbaja Murni and Indo Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ladangbaja Murni position performs unexpectedly, Indo Oil 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 Oil will offset losses from the drop in Indo Oil's long position.| Ladangbaja Murni vs. PAM Mineral Tbk | Ladangbaja Murni vs. Nusa Palapa Gemilang | Ladangbaja Murni vs. Diagnos Laboratorium Utama | Ladangbaja Murni vs. PT Sunter Lakeside |
| Indo Oil vs. Garudafood Putra Putri | Indo Oil vs. Estika Tata Tiara | Indo Oil vs. Campina Ice Cream | Indo Oil vs. PT Wahana Interfood |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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