Correlation Between Unilever Indonesia and Indo Kordsa
Can any of the company-specific risk be diversified away by investing in both Unilever Indonesia and Indo Kordsa 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 Unilever Indonesia and Indo Kordsa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Indonesia Tbk and Indo Kordsa Tbk, you can compare the effects of market volatilities on Unilever Indonesia and Indo Kordsa 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 Unilever Indonesia with a short position of Indo Kordsa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Indonesia and Indo Kordsa.
Diversification Opportunities for Unilever Indonesia and Indo Kordsa
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Unilever and Indo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Indonesia Tbk and Indo Kordsa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Kordsa Tbk and Unilever Indonesia 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 Unilever Indonesia Tbk are associated (or correlated) with Indo Kordsa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Kordsa Tbk has no effect on the direction of Unilever Indonesia i.e., Unilever Indonesia and Indo Kordsa go up and down completely randomly.
Pair Corralation between Unilever Indonesia and Indo Kordsa
Assuming the 90 days trading horizon Unilever Indonesia Tbk is expected to under-perform the Indo Kordsa. In addition to that, Unilever Indonesia is 2.98 times more volatile than Indo Kordsa Tbk. It trades about -0.44 of its total potential returns per unit of risk. Indo Kordsa Tbk is currently generating about -0.04 per unit of volatility. If you would invest 585,000 in Indo Kordsa Tbk on November 27, 2024 and sell it today you would lose (5,000) from holding Indo Kordsa Tbk or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever Indonesia Tbk vs. Indo Kordsa Tbk
Performance |
| Timeline |
| Unilever Indonesia Tbk |
| Indo Kordsa Tbk |
Unilever Indonesia and Indo Kordsa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Indonesia and Indo Kordsa
The main advantage of trading using opposite Unilever Indonesia and Indo Kordsa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Indonesia position performs unexpectedly, Indo Kordsa 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 Indo Kordsa will offset losses from the drop in Indo Kordsa's long position.| Unilever Indonesia vs. PT Indofood Sukses | Unilever Indonesia vs. Astra International Tbk | Unilever Indonesia vs. Telkom Indonesia Tbk | Unilever Indonesia vs. Bank Central Asia |
| Indo Kordsa vs. Goodyear Indonesia Tbk | Indo Kordsa vs. Sepatu Bata Tbk | Indo Kordsa vs. Indospring Tbk | Indo Kordsa vs. Ever Shine Textile |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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