Correlation Between Modern Internasional and Inocycle Technology
Can any of the company-specific risk be diversified away by investing in both Modern Internasional and Inocycle Technology 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 Modern Internasional and Inocycle Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modern Internasional Tbk and Inocycle Technology Tbk, you can compare the effects of market volatilities on Modern Internasional and Inocycle Technology 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 Modern Internasional with a short position of Inocycle Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modern Internasional and Inocycle Technology.
Diversification Opportunities for Modern Internasional and Inocycle Technology
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Modern and Inocycle is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Modern Internasional Tbk and Inocycle Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inocycle Technology Tbk and Modern Internasional 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 Modern Internasional Tbk are associated (or correlated) with Inocycle Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inocycle Technology Tbk has no effect on the direction of Modern Internasional i.e., Modern Internasional and Inocycle Technology go up and down completely randomly.
Pair Corralation between Modern Internasional and Inocycle Technology
Assuming the 90 days trading horizon Modern Internasional Tbk is expected to generate 5.49 times more return on investment than Inocycle Technology. However, Modern Internasional is 5.49 times more volatile than Inocycle Technology Tbk. It trades about 0.03 of its potential returns per unit of risk. Inocycle Technology Tbk is currently generating about -0.07 per unit of risk. If you would invest 700.00 in Modern Internasional Tbk on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Modern Internasional Tbk or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modern Internasional Tbk vs. Inocycle Technology Tbk
Performance |
| Timeline |
| Modern Internasional Tbk |
| Inocycle Technology Tbk |
Modern Internasional and Inocycle Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modern Internasional and Inocycle Technology
The main advantage of trading using opposite Modern Internasional and Inocycle Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modern Internasional position performs unexpectedly, Inocycle Technology 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 Inocycle Technology will offset losses from the drop in Inocycle Technology's long position.The idea behind Modern Internasional Tbk and Inocycle Technology Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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