Correlation Between Chandra Asri and Kedaung Indah
Can any of the company-specific risk be diversified away by investing in both Chandra Asri 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 Chandra Asri and Kedaung Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chandra Asri Petrochemical and Kedaung Indah Can, you can compare the effects of market volatilities on Chandra Asri 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 Chandra Asri with a short position of Kedaung Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chandra Asri and Kedaung Indah.
Diversification Opportunities for Chandra Asri and Kedaung Indah
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chandra and Kedaung is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chandra Asri Petrochemical 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 Chandra Asri 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 Chandra Asri Petrochemical 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 Chandra Asri i.e., Chandra Asri and Kedaung Indah go up and down completely randomly.
Pair Corralation between Chandra Asri and Kedaung Indah
Assuming the 90 days trading horizon Chandra Asri Petrochemical is expected to under-perform the Kedaung Indah. In addition to that, Chandra Asri is 1.93 times more volatile than Kedaung Indah Can. It trades about -0.25 of its total potential returns per unit of risk. Kedaung Indah Can is currently generating about -0.41 per unit of volatility. If you would invest 14,800 in Kedaung Indah Can on August 28, 2024 and sell it today you would lose (2,700) from holding Kedaung Indah Can or give up 18.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chandra Asri Petrochemical vs. Kedaung Indah Can
Performance |
| Timeline |
| Chandra Asri Petroch |
| Kedaung Indah Can |
Chandra Asri and Kedaung Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chandra Asri and Kedaung Indah
The main advantage of trading using opposite Chandra Asri and Kedaung Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chandra Asri 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.| Chandra Asri vs. Barito Pacific Tbk | Chandra Asri vs. Pabrik Kertas Tjiwi | Chandra Asri vs. Charoen Pokphand Indonesia | Chandra Asri vs. Indah Kiat Pulp |
| Kedaung Indah vs. Langgeng Makmur Industri | Kedaung Indah vs. Kedawung Setia Industrial | Kedaung Indah vs. Mustika Ratu Tbk | Kedaung Indah vs. Kabelindo Murni 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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