Correlation Between Cikarang Listrindo and Mark Dynamics
Can any of the company-specific risk be diversified away by investing in both Cikarang Listrindo and Mark Dynamics 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 Mark Dynamics 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 Mark Dynamics Indonesia, you can compare the effects of market volatilities on Cikarang Listrindo and Mark Dynamics 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 Mark Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cikarang Listrindo and Mark Dynamics.
Diversification Opportunities for Cikarang Listrindo and Mark Dynamics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cikarang and Mark is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cikarang Listrindo Tbk and Mark Dynamics Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mark Dynamics Indonesia 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 Mark Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mark Dynamics Indonesia has no effect on the direction of Cikarang Listrindo i.e., Cikarang Listrindo and Mark Dynamics go up and down completely randomly.
Pair Corralation between Cikarang Listrindo and Mark Dynamics
Assuming the 90 days trading horizon Cikarang Listrindo Tbk is expected to generate 0.3 times more return on investment than Mark Dynamics. However, Cikarang Listrindo Tbk is 3.38 times less risky than Mark Dynamics. It trades about -0.04 of its potential returns per unit of risk. Mark Dynamics Indonesia is currently generating about -0.11 per unit of risk. If you would invest 70,500 in Cikarang Listrindo Tbk on August 28, 2024 and sell it today you would lose (500.00) from holding Cikarang Listrindo Tbk or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cikarang Listrindo Tbk vs. Mark Dynamics Indonesia
Performance |
| Timeline |
| Cikarang Listrindo Tbk |
| Mark Dynamics Indonesia |
Cikarang Listrindo and Mark Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cikarang Listrindo and Mark Dynamics
The main advantage of trading using opposite Cikarang Listrindo and Mark Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cikarang Listrindo position performs unexpectedly, Mark Dynamics 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 Mark Dynamics will offset losses from the drop in Mark Dynamics' long position.| Cikarang Listrindo vs. Aneka Tambang Persero | Cikarang Listrindo vs. Bukit Asam Tbk | Cikarang Listrindo vs. Telkom Indonesia Tbk | Cikarang Listrindo vs. Astra International 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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