Correlation Between Indo Oil and Ace Oldfields
Can any of the company-specific risk be diversified away by investing in both Indo Oil and Ace Oldfields 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 Indo Oil and Ace Oldfields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indo Oil Perkasa and Ace Oldfields PT, you can compare the effects of market volatilities on Indo Oil and Ace Oldfields 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 Indo Oil with a short position of Ace Oldfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Oil and Ace Oldfields.
Diversification Opportunities for Indo Oil and Ace Oldfields
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Indo and Ace is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Indo Oil Perkasa and Ace Oldfields PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Oldfields PT and Indo Oil 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 Indo Oil Perkasa are associated (or correlated) with Ace Oldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Oldfields PT has no effect on the direction of Indo Oil i.e., Indo Oil and Ace Oldfields go up and down completely randomly.
Pair Corralation between Indo Oil and Ace Oldfields
Assuming the 90 days trading horizon Indo Oil Perkasa is expected to generate 0.8 times more return on investment than Ace Oldfields. However, Indo Oil Perkasa is 1.25 times less risky than Ace Oldfields. It trades about -0.09 of its potential returns per unit of risk. Ace Oldfields PT is currently generating about -0.19 per unit of risk. If you would invest 10,100 in Indo Oil Perkasa on August 26, 2024 and sell it today you would lose (300.00) from holding Indo Oil Perkasa or give up 2.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indo Oil Perkasa vs. Ace Oldfields PT
Performance |
| Timeline |
| Indo Oil Perkasa |
| Ace Oldfields PT |
Indo Oil and Ace Oldfields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indo Oil and Ace Oldfields
The main advantage of trading using opposite Indo Oil and Ace Oldfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Oil position performs unexpectedly, Ace Oldfields 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 Ace Oldfields will offset losses from the drop in Ace Oldfields' long position.| Indo Oil vs. Buyung Poetra Sembada | Indo Oil vs. Garudafood Putra Putri | Indo Oil vs. Campina Ice Cream | Indo Oil vs. Wijaya Karya Bangunan |
| Ace Oldfields vs. Ladangbaja Murni PT | Ace Oldfields vs. PT Hasnur Internasional | Ace Oldfields vs. Geoprima Solusi Tbk | Ace Oldfields vs. Prima Andalan Mandiri |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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