Correlation Between Pelangi Indah and Indal Aluminium
Can any of the company-specific risk be diversified away by investing in both Pelangi Indah and Indal Aluminium 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 Pelangi Indah and Indal Aluminium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pelangi Indah Canindo and Indal Aluminium Industry, you can compare the effects of market volatilities on Pelangi Indah and Indal Aluminium 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 Pelangi Indah with a short position of Indal Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pelangi Indah and Indal Aluminium.
Diversification Opportunities for Pelangi Indah and Indal Aluminium
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pelangi and Indal is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pelangi Indah Canindo and Indal Aluminium Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indal Aluminium Industry and Pelangi Indah 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 Pelangi Indah Canindo are associated (or correlated) with Indal Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indal Aluminium Industry has no effect on the direction of Pelangi Indah i.e., Pelangi Indah and Indal Aluminium go up and down completely randomly.
Pair Corralation between Pelangi Indah and Indal Aluminium
Assuming the 90 days trading horizon Pelangi Indah Canindo is expected to under-perform the Indal Aluminium. But the stock apears to be less risky and, when comparing its historical volatility, Pelangi Indah Canindo is 5.7 times less risky than Indal Aluminium. The stock trades about -0.06 of its potential returns per unit of risk. The Indal Aluminium Industry is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 9,300 in Indal Aluminium Industry on November 28, 2024 and sell it today you would earn a total of 7,100 from holding Indal Aluminium Industry or generate 76.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Pelangi Indah Canindo vs. Indal Aluminium Industry
Performance |
| Timeline |
| Pelangi Indah Canindo |
| Indal Aluminium Industry |
Pelangi Indah and Indal Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pelangi Indah and Indal Aluminium
The main advantage of trading using opposite Pelangi Indah and Indal Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pelangi Indah position performs unexpectedly, Indal Aluminium 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 Indal Aluminium will offset losses from the drop in Indal Aluminium's long position.| Pelangi Indah vs. Lionmesh Prima Tbk | Pelangi Indah vs. PT Mulia Industrindo | Pelangi Indah vs. Lion Metal Works | Pelangi Indah vs. Tembaga Mulia Semanan |
| Indal Aluminium vs. Intanwijaya Internasional Tbk | Indal Aluminium vs. Alumindo Light Metal | Indal Aluminium vs. Champion Pacific Indonesia | Indal Aluminium vs. Betonjaya Manunggal 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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