Correlation Between Summit Materials and PT Indocement
Can any of the company-specific risk be diversified away by investing in both Summit Materials and PT Indocement 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 Summit Materials and PT Indocement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and PT Indocement Tunggal, you can compare the effects of market volatilities on Summit Materials and PT Indocement 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 Summit Materials with a short position of PT Indocement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and PT Indocement.
Diversification Opportunities for Summit Materials and PT Indocement
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and PITPF is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and PT Indocement Tunggal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indocement Tunggal and Summit Materials 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 Summit Materials are associated (or correlated) with PT Indocement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indocement Tunggal has no effect on the direction of Summit Materials i.e., Summit Materials and PT Indocement go up and down completely randomly.
Pair Corralation between Summit Materials and PT Indocement
If you would invest 4,741 in Summit Materials on September 1, 2024 and sell it today you would earn a total of 353.00 from holding Summit Materials or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Summit Materials vs. PT Indocement Tunggal
Performance |
| Timeline |
| Summit Materials |
| PT Indocement Tunggal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Summit Materials and PT Indocement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and PT Indocement
The main advantage of trading using opposite Summit Materials and PT Indocement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, PT Indocement 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 PT Indocement will offset losses from the drop in PT Indocement's long position.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
| PT Indocement vs. Summit Materials | PT Indocement vs. Cementos Pacasmayo SAA | PT Indocement vs. James Hardie Industries | PT Indocement vs. United States Lime |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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