Correlation Between Indah Kiat and Bank Qnb
Can any of the company-specific risk be diversified away by investing in both Indah Kiat and Bank Qnb 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 Indah Kiat and Bank Qnb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indah Kiat Pulp and Bank Qnb Indonesia, you can compare the effects of market volatilities on Indah Kiat and Bank Qnb 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 Indah Kiat with a short position of Bank Qnb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indah Kiat and Bank Qnb.
Diversification Opportunities for Indah Kiat and Bank Qnb
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Indah and Bank is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Indah Kiat Pulp and Bank Qnb Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Qnb Indonesia and Indah Kiat 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 Indah Kiat Pulp are associated (or correlated) with Bank Qnb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Qnb Indonesia has no effect on the direction of Indah Kiat i.e., Indah Kiat and Bank Qnb go up and down completely randomly.
Pair Corralation between Indah Kiat and Bank Qnb
Assuming the 90 days trading horizon Indah Kiat Pulp is expected to generate 0.88 times more return on investment than Bank Qnb. However, Indah Kiat Pulp is 1.14 times less risky than Bank Qnb. It trades about 0.03 of its potential returns per unit of risk. Bank Qnb Indonesia is currently generating about -0.05 per unit of risk. If you would invest 757,321 in Indah Kiat Pulp on February 5, 2024 and sell it today you would earn a total of 177,679 from holding Indah Kiat Pulp or generate 23.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Indah Kiat Pulp vs. Bank Qnb Indonesia
Performance |
Timeline |
Indah Kiat Pulp |
Bank Qnb Indonesia |
Indah Kiat and Bank Qnb Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Indah Kiat and Bank Qnb
The main advantage of trading using opposite Indah Kiat and Bank Qnb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indah Kiat position performs unexpectedly, Bank Qnb 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 Bank Qnb will offset losses from the drop in Bank Qnb's long position.The idea behind Indah Kiat Pulp and Bank Qnb Indonesia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Bank Qnb vs. Bank Victoria International | Bank Qnb vs. Bank Mnc Internasional | Bank Qnb vs. Bank Bumi Arta | Bank Qnb vs. Bank Capital Indonesia |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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