Correlation Between Alkindo Naratama and Sawit Sumbermas
Can any of the company-specific risk be diversified away by investing in both Alkindo Naratama and Sawit Sumbermas 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 Alkindo Naratama and Sawit Sumbermas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alkindo Naratama Tbk and Sawit Sumbermas Sarana, you can compare the effects of market volatilities on Alkindo Naratama and Sawit Sumbermas 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 Alkindo Naratama with a short position of Sawit Sumbermas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkindo Naratama and Sawit Sumbermas.
Diversification Opportunities for Alkindo Naratama and Sawit Sumbermas
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alkindo and Sawit is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alkindo Naratama Tbk and Sawit Sumbermas Sarana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sawit Sumbermas Sarana and Alkindo Naratama 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 Alkindo Naratama Tbk are associated (or correlated) with Sawit Sumbermas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sawit Sumbermas Sarana has no effect on the direction of Alkindo Naratama i.e., Alkindo Naratama and Sawit Sumbermas go up and down completely randomly.
Pair Corralation between Alkindo Naratama and Sawit Sumbermas
Assuming the 90 days trading horizon Alkindo Naratama Tbk is expected to generate 1.46 times more return on investment than Sawit Sumbermas. However, Alkindo Naratama is 1.46 times more volatile than Sawit Sumbermas Sarana. It trades about 0.18 of its potential returns per unit of risk. Sawit Sumbermas Sarana is currently generating about -0.09 per unit of risk. If you would invest 71,500 in Alkindo Naratama Tbk on January 25, 2024 and sell it today you would earn a total of 14,500 from holding Alkindo Naratama Tbk or generate 20.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.06% |
| Values | Daily Returns |
Alkindo Naratama Tbk vs. Sawit Sumbermas Sarana
Performance |
| Timeline |
| Alkindo Naratama Tbk |
| Sawit Sumbermas Sarana |
Alkindo Naratama and Sawit Sumbermas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alkindo Naratama and Sawit Sumbermas
The main advantage of trading using opposite Alkindo Naratama and Sawit Sumbermas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alkindo Naratama position performs unexpectedly, Sawit Sumbermas 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 Sawit Sumbermas will offset losses from the drop in Sawit Sumbermas' long position.| Alkindo Naratama vs. Argha Karya Prima | Alkindo Naratama vs. Gunawan Dianjaya Steel | Alkindo Naratama vs. Arwana Citramulia Tbk | Alkindo Naratama vs. Alakasa Industrindo Tbk |
| Sawit Sumbermas vs. Surya Citra Media | Sawit Sumbermas vs. Matahari Department Store | Sawit Sumbermas vs. Salim Ivomas Pratama | Sawit Sumbermas vs. Akr Corporindo 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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