Correlation Between Prima Andalan and Indo Oil
Can any of the company-specific risk be diversified away by investing in both Prima Andalan 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 Prima Andalan and Indo Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prima Andalan Mandiri and Indo Oil Perkasa, you can compare the effects of market volatilities on Prima Andalan 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 Prima Andalan with a short position of Indo Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prima Andalan and Indo Oil.
Diversification Opportunities for Prima Andalan and Indo Oil
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prima and Indo is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Prima Andalan Mandiri 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 Prima Andalan 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 Prima Andalan Mandiri 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 Prima Andalan i.e., Prima Andalan and Indo Oil go up and down completely randomly.
Pair Corralation between Prima Andalan and Indo Oil
Assuming the 90 days trading horizon Prima Andalan is expected to generate 16.92 times less return on investment than Indo Oil. But when comparing it to its historical volatility, Prima Andalan Mandiri is 4.69 times less risky than Indo Oil. It trades about 0.02 of its potential returns per unit of risk. Indo Oil Perkasa is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,500 in Indo Oil Perkasa on August 31, 2024 and sell it today you would earn a total of 2,200 from holding Indo Oil Perkasa or generate 29.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prima Andalan Mandiri vs. Indo Oil Perkasa
Performance |
| Timeline |
| Prima Andalan Mandiri |
| Indo Oil Perkasa |
Prima Andalan and Indo Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prima Andalan and Indo Oil
The main advantage of trading using opposite Prima Andalan and Indo Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prima Andalan 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.| Prima Andalan vs. Bank Artos Indonesia | Prima Andalan vs. GoTo Gojek Tokopedia | Prima Andalan vs. Elang Mahkota Teknologi | Prima Andalan vs. PT Bukalapak |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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