Correlation Between Indo Straits and Intanwijaya Internasional
Can any of the company-specific risk be diversified away by investing in both Indo Straits and Intanwijaya Internasional 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 Straits and Intanwijaya Internasional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indo Straits Tbk and Intanwijaya Internasional Tbk, you can compare the effects of market volatilities on Indo Straits and Intanwijaya Internasional 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 Straits with a short position of Intanwijaya Internasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Straits and Intanwijaya Internasional.
Diversification Opportunities for Indo Straits and Intanwijaya Internasional
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indo and Intanwijaya is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Indo Straits Tbk and Intanwijaya Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intanwijaya Internasional and Indo Straits 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 Straits Tbk are associated (or correlated) with Intanwijaya Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intanwijaya Internasional has no effect on the direction of Indo Straits i.e., Indo Straits and Intanwijaya Internasional go up and down completely randomly.
Pair Corralation between Indo Straits and Intanwijaya Internasional
Assuming the 90 days trading horizon Indo Straits Tbk is expected to under-perform the Intanwijaya Internasional. In addition to that, Indo Straits is 3.56 times more volatile than Intanwijaya Internasional Tbk. It trades about -0.01 of its total potential returns per unit of risk. Intanwijaya Internasional Tbk is currently generating about 0.04 per unit of volatility. If you would invest 50,952 in Intanwijaya Internasional Tbk on September 4, 2024 and sell it today you would earn a total of 7,048 from holding Intanwijaya Internasional Tbk or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indo Straits Tbk vs. Intanwijaya Internasional Tbk
Performance |
| Timeline |
| Indo Straits Tbk |
| Intanwijaya Internasional |
Indo Straits and Intanwijaya Internasional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indo Straits and Intanwijaya Internasional
The main advantage of trading using opposite Indo Straits and Intanwijaya Internasional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Straits position performs unexpectedly, Intanwijaya Internasional 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 Intanwijaya Internasional will offset losses from the drop in Intanwijaya Internasional's long position.| Indo Straits vs. Intanwijaya Internasional Tbk | Indo Straits vs. Champion Pacific Indonesia | Indo Straits vs. Mitra Pinasthika Mustika | Indo Straits vs. Jakarta Int Hotels |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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