Correlation Between Pabrik Kertas and Kedaung Indah
Can any of the company-specific risk be diversified away by investing in both Pabrik Kertas and Kedaung Indah 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 Pabrik Kertas and Kedaung Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pabrik Kertas Tjiwi and Kedaung Indah Can, you can compare the effects of market volatilities on Pabrik Kertas and Kedaung Indah 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 Pabrik Kertas with a short position of Kedaung Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pabrik Kertas and Kedaung Indah.
Diversification Opportunities for Pabrik Kertas and Kedaung Indah
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pabrik and Kedaung is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pabrik Kertas Tjiwi and Kedaung Indah Can in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kedaung Indah Can and Pabrik Kertas 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 Pabrik Kertas Tjiwi are associated (or correlated) with Kedaung Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kedaung Indah Can has no effect on the direction of Pabrik Kertas i.e., Pabrik Kertas and Kedaung Indah go up and down completely randomly.
Pair Corralation between Pabrik Kertas and Kedaung Indah
Assuming the 90 days trading horizon Pabrik Kertas Tjiwi is expected to under-perform the Kedaung Indah. But the stock apears to be less risky and, when comparing its historical volatility, Pabrik Kertas Tjiwi is 2.46 times less risky than Kedaung Indah. The stock trades about 0.0 of its potential returns per unit of risk. The Kedaung Indah Can is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 16,600 in Kedaung Indah Can on September 12, 2024 and sell it today you would lose (3,000) from holding Kedaung Indah Can or give up 18.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pabrik Kertas Tjiwi vs. Kedaung Indah Can
Performance |
| Timeline |
| Pabrik Kertas Tjiwi |
| Kedaung Indah Can |
Pabrik Kertas and Kedaung Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pabrik Kertas and Kedaung Indah
The main advantage of trading using opposite Pabrik Kertas and Kedaung Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pabrik Kertas position performs unexpectedly, Kedaung Indah 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 Kedaung Indah will offset losses from the drop in Kedaung Indah's long position.| Pabrik Kertas vs. Kedaung Indah Can | Pabrik Kertas vs. Kabelindo Murni Tbk | Pabrik Kertas vs. Champion Pacific Indonesia | Pabrik Kertas vs. Bhuwanatala Indah Permai |
| Kedaung Indah vs. Pembangunan Graha Lestari | Kedaung Indah vs. Pembangunan Jaya Ancol | Kedaung Indah vs. Hotel Sahid Jaya | Kedaung Indah vs. Mitrabara Adiperdana PT |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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