Correlation Between PT Indah and Nine Dragons

Can any of the company-specific risk be diversified away by investing in both PT Indah and Nine Dragons 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 PT Indah and Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Indah Kiat and Nine Dragons Paper, you can compare the effects of market volatilities on PT Indah and Nine Dragons 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 PT Indah with a short position of Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indah and Nine Dragons.

Diversification Opportunities for PT Indah and Nine Dragons

0.1

Correlation Coefficient

PT Indah  Nine Dragons

Average diversification

The 3 months correlation between PIKQF and Nine is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding PT Indah Kiat and Nine Dragons Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Dragons Paper and PT Indah 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 PT Indah Kiat are associated (or correlated) with Nine Dragons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Dragons Paper has no effect on the direction of PT Indah i.e., PT Indah and Nine Dragons go up and down completely randomly.

Pair Corralation between PT Indah and Nine Dragons

Assuming the 90 days horizon PT Indah Kiat is expected to under-perform the Nine Dragons. In addition to that, PT Indah is 1.28 times more volatile than Nine Dragons Paper. It trades about -0.68 of its total potential returns per unit of risk. Nine Dragons Paper is currently generating about 0.03 per unit of volatility. If you would invest  1,117  in Nine Dragons Paper on August 1, 2025 and sell it today you would earn a total of  263.00  from holding Nine Dragons Paper or generate 23.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	3.42%
Values	Daily Returns

PT Indah Kiat  vs.  Nine Dragons Paper

PT Indah Kiat

Risk-Adjusted Performance

Weakest

Over the last 90 days PT Indah Kiat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Indah is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nine Dragons Paper

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Dragons Paper are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Nine Dragons showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indah and Nine Dragons

The main advantage of trading using opposite PT Indah and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indah position performs unexpectedly, Nine Dragons 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 Nine Dragons will offset losses from the drop in Nine Dragons' long position.

The idea behind PT Indah Kiat and Nine Dragons Paper 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.