Correlation Between Perusahaan Gas and Indah Kiat
Can any of the company-specific risk be diversified away by investing in both Perusahaan Gas 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 Perusahaan Gas and Indah Kiat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perusahaan Gas Negara and Indah Kiat Pulp, you can compare the effects of market volatilities on Perusahaan Gas 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 Perusahaan Gas with a short position of Indah Kiat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perusahaan Gas and Indah Kiat.
Diversification Opportunities for Perusahaan Gas and Indah Kiat
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Perusahaan and Indah is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Gas Negara 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 Perusahaan Gas 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 Perusahaan Gas Negara 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 Perusahaan Gas i.e., Perusahaan Gas and Indah Kiat go up and down completely randomly.
Pair Corralation between Perusahaan Gas and Indah Kiat
Assuming the 90 days trading horizon Perusahaan Gas Negara is expected to generate 0.96 times more return on investment than Indah Kiat. However, Perusahaan Gas Negara is 1.05 times less risky than Indah Kiat. It trades about 0.04 of its potential returns per unit of risk. Indah Kiat Pulp is currently generating about -0.09 per unit of risk. If you would invest 143,716 in Perusahaan Gas Negara on September 3, 2024 and sell it today you would earn a total of 8,784 from holding Perusahaan Gas Negara or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perusahaan Gas Negara vs. Indah Kiat Pulp
Performance |
| Timeline |
| Perusahaan Gas Negara |
| Indah Kiat Pulp |
Perusahaan Gas and Indah Kiat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perusahaan Gas and Indah Kiat
The main advantage of trading using opposite Perusahaan Gas and Indah Kiat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perusahaan Gas 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.| Perusahaan Gas vs. Aneka Tambang Persero | Perusahaan Gas vs. Bukit Asam Tbk | Perusahaan Gas vs. Telkom Indonesia Tbk | Perusahaan Gas vs. Astra International Tbk |
| Indah Kiat vs. Pabrik Kertas Tjiwi | Indah Kiat vs. Indocement Tunggal Prakarsa | Indah Kiat vs. Barito Pacific Tbk | Indah Kiat vs. United Tractors Tbk |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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