Correlation Between Kapuas Prima and Cikarang Listrindo
Can any of the company-specific risk be diversified away by investing in both Kapuas Prima and Cikarang Listrindo 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 Kapuas Prima and Cikarang Listrindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kapuas Prima Coal and Cikarang Listrindo Tbk, you can compare the effects of market volatilities on Kapuas Prima and Cikarang Listrindo 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 Kapuas Prima with a short position of Cikarang Listrindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kapuas Prima and Cikarang Listrindo.
Diversification Opportunities for Kapuas Prima and Cikarang Listrindo
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kapuas and Cikarang is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kapuas Prima Coal and Cikarang Listrindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cikarang Listrindo Tbk and Kapuas Prima 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 Kapuas Prima Coal are associated (or correlated) with Cikarang Listrindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cikarang Listrindo Tbk has no effect on the direction of Kapuas Prima i.e., Kapuas Prima and Cikarang Listrindo go up and down completely randomly.
Pair Corralation between Kapuas Prima and Cikarang Listrindo
Assuming the 90 days trading horizon Kapuas Prima Coal is expected to generate 5.8 times more return on investment than Cikarang Listrindo. However, Kapuas Prima is 5.8 times more volatile than Cikarang Listrindo Tbk. It trades about 0.18 of its potential returns per unit of risk. Cikarang Listrindo Tbk is currently generating about -0.18 per unit of risk. If you would invest 1,600 in Kapuas Prima Coal on November 3, 2024 and sell it today you would earn a total of 300.00 from holding Kapuas Prima Coal or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kapuas Prima Coal vs. Cikarang Listrindo Tbk
Performance |
| Timeline |
| Kapuas Prima Coal |
| Cikarang Listrindo Tbk |
Kapuas Prima and Cikarang Listrindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kapuas Prima and Cikarang Listrindo
The main advantage of trading using opposite Kapuas Prima and Cikarang Listrindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kapuas Prima position performs unexpectedly, Cikarang Listrindo 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 Cikarang Listrindo will offset losses from the drop in Cikarang Listrindo's long position.| Kapuas Prima vs. Merdeka Copper Gold | Kapuas Prima vs. J Resources Asia | Kapuas Prima vs. Central Omega Resources | Kapuas Prima vs. Puradelta Lestari PT |
| Cikarang Listrindo vs. Puradelta Lestari PT | Cikarang Listrindo vs. Mitra Pinasthika Mustika | Cikarang Listrindo vs. Wijaya Karya Bangunan | Cikarang Listrindo vs. PT Sarana Menara |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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