Correlation Between Cikarang Listrindo and Kencana Energi
Can any of the company-specific risk be diversified away by investing in both Cikarang Listrindo and Kencana Energi 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 Cikarang Listrindo and Kencana Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cikarang Listrindo Tbk and Kencana Energi Lestari, you can compare the effects of market volatilities on Cikarang Listrindo and Kencana Energi 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 Cikarang Listrindo with a short position of Kencana Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cikarang Listrindo and Kencana Energi.
Diversification Opportunities for Cikarang Listrindo and Kencana Energi
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cikarang and Kencana is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cikarang Listrindo Tbk and Kencana Energi Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kencana Energi Lestari and Cikarang Listrindo 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 Cikarang Listrindo Tbk are associated (or correlated) with Kencana Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kencana Energi Lestari has no effect on the direction of Cikarang Listrindo i.e., Cikarang Listrindo and Kencana Energi go up and down completely randomly.
Pair Corralation between Cikarang Listrindo and Kencana Energi
Assuming the 90 days trading horizon Cikarang Listrindo Tbk is expected to under-perform the Kencana Energi. But the stock apears to be less risky and, when comparing its historical volatility, Cikarang Listrindo Tbk is 3.2 times less risky than Kencana Energi. The stock trades about -0.16 of its potential returns per unit of risk. The Kencana Energi Lestari is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 56,000 in Kencana Energi Lestari on November 5, 2024 and sell it today you would earn a total of 8,000 from holding Kencana Energi Lestari or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cikarang Listrindo Tbk vs. Kencana Energi Lestari
Performance |
| Timeline |
| Cikarang Listrindo Tbk |
| Kencana Energi Lestari |
Cikarang Listrindo and Kencana Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cikarang Listrindo and Kencana Energi
The main advantage of trading using opposite Cikarang Listrindo and Kencana Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cikarang Listrindo position performs unexpectedly, Kencana Energi 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 Kencana Energi will offset losses from the drop in Kencana Energi's long position.| Cikarang Listrindo vs. Puradelta Lestari PT | Cikarang Listrindo vs. Mitra Pinasthika Mustika | Cikarang Listrindo vs. Wijaya Karya Bangunan | Cikarang Listrindo vs. PT Sarana Menara |
| Kencana Energi vs. PT Indonesia Kendaraan | Kencana Energi vs. Cikarang Listrindo Tbk | Kencana Energi vs. Jasa Armada Indonesia | Kencana Energi vs. Pelita Samudera Shipping |
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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