Correlation Between Asia Pacific and Indo Kordsa
Can any of the company-specific risk be diversified away by investing in both Asia Pacific and Indo Kordsa 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 Asia Pacific and Indo Kordsa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Pacific Investama and Indo Kordsa Tbk, you can compare the effects of market volatilities on Asia Pacific and Indo Kordsa 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 Asia Pacific with a short position of Indo Kordsa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Pacific and Indo Kordsa.
Diversification Opportunities for Asia Pacific and Indo Kordsa
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asia and Indo is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Asia Pacific Investama and Indo Kordsa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Kordsa Tbk and Asia Pacific 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 Asia Pacific Investama are associated (or correlated) with Indo Kordsa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Kordsa Tbk has no effect on the direction of Asia Pacific i.e., Asia Pacific and Indo Kordsa go up and down completely randomly.
Pair Corralation between Asia Pacific and Indo Kordsa
Assuming the 90 days trading horizon Asia Pacific Investama is expected to generate 1.25 times more return on investment than Indo Kordsa. However, Asia Pacific is 1.25 times more volatile than Indo Kordsa Tbk. It trades about 0.08 of its potential returns per unit of risk. Indo Kordsa Tbk is currently generating about 0.01 per unit of risk. If you would invest 3,500 in Asia Pacific Investama on October 25, 2024 and sell it today you would earn a total of 100.00 from holding Asia Pacific Investama or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Pacific Investama vs. Indo Kordsa Tbk
Performance |
| Timeline |
| Asia Pacific Investama |
| Indo Kordsa Tbk |
Asia Pacific and Indo Kordsa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Pacific and Indo Kordsa
The main advantage of trading using opposite Asia Pacific and Indo Kordsa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Pacific position performs unexpectedly, Indo Kordsa 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 Kordsa will offset losses from the drop in Indo Kordsa's long position.| Asia Pacific vs. Pan Brothers Tbk | Asia Pacific vs. Asia Pacific Fibers | Asia Pacific vs. Ricky Putra Globalindo | Asia Pacific vs. Prima Alloy Steel |
| Indo Kordsa vs. Goodyear Indonesia Tbk | Indo Kordsa vs. Sepatu Bata Tbk | Indo Kordsa vs. Indospring Tbk | Indo Kordsa vs. Ever Shine Textile |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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