Correlation Between Matahari Putra and Indah Kiat
Can any of the company-specific risk be diversified away by investing in both Matahari Putra and Indah Kiat 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 Matahari Putra and Indah Kiat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matahari Putra Prima and Indah Kiat Pulp, you can compare the effects of market volatilities on Matahari Putra and Indah Kiat 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 Matahari Putra with a short position of Indah Kiat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matahari Putra and Indah Kiat.
Diversification Opportunities for Matahari Putra and Indah Kiat
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Matahari and Indah is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Matahari Putra Prima and Indah Kiat Pulp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indah Kiat Pulp and Matahari Putra 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 Matahari Putra Prima are associated (or correlated) with Indah Kiat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indah Kiat Pulp has no effect on the direction of Matahari Putra i.e., Matahari Putra and Indah Kiat go up and down completely randomly.
Pair Corralation between Matahari Putra and Indah Kiat
Assuming the 90 days trading horizon Matahari Putra Prima is expected to generate 6.0 times more return on investment than Indah Kiat. However, Matahari Putra is 6.0 times more volatile than Indah Kiat Pulp. It trades about 0.06 of its potential returns per unit of risk. Indah Kiat Pulp is currently generating about -0.32 per unit of risk. If you would invest 7,500 in Matahari Putra Prima on August 24, 2024 and sell it today you would earn a total of 100.00 from holding Matahari Putra Prima or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matahari Putra Prima vs. Indah Kiat Pulp
Performance |
| Timeline |
| Matahari Putra Prima |
| Indah Kiat Pulp |
Matahari Putra and Indah Kiat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matahari Putra and Indah Kiat
The main advantage of trading using opposite Matahari Putra and Indah Kiat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matahari Putra position performs unexpectedly, Indah Kiat 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 Indah Kiat will offset losses from the drop in Indah Kiat's long position.| Matahari Putra vs. Unilever Indonesia Tbk | Matahari Putra vs. PT Indofood Sukses | Matahari Putra vs. Astra International Tbk | Matahari Putra vs. Telkom Indonesia Tbk |
| Indah Kiat vs. Kedaung Indah Can | Indah Kiat vs. Langgeng Makmur Industri | Indah Kiat vs. Kabelindo Murni Tbk | Indah Kiat 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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