Correlation Between Akbar Indomakmur and Adhi Karya

Can any of the company-specific risk be diversified away by investing in both Akbar Indomakmur and Adhi Karya 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 Akbar Indomakmur and Adhi Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Akbar Indomakmur Stimec and Adhi Karya Persero, you can compare the effects of market volatilities on Akbar Indomakmur and Adhi Karya 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 Akbar Indomakmur with a short position of Adhi Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akbar Indomakmur and Adhi Karya.

Diversification Opportunities for Akbar Indomakmur and Adhi Karya

0.7

Correlation Coefficient

Akbar Indomakmur  Adhi Karya

Poor diversification

The 3 months correlation between Akbar and Adhi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Akbar Indomakmur Stimec and Adhi Karya Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adhi Karya Persero and Akbar Indomakmur 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 Akbar Indomakmur Stimec are associated (or correlated) with Adhi Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adhi Karya Persero has no effect on the direction of Akbar Indomakmur i.e., Akbar Indomakmur and Adhi Karya go up and down completely randomly.

Pair Corralation between Akbar Indomakmur and Adhi Karya

Assuming the 90 days trading horizon Akbar Indomakmur Stimec is expected to generate 1.84 times more return on investment than Adhi Karya. However, Akbar Indomakmur is 1.84 times more volatile than Adhi Karya Persero. It trades about 0.04 of its potential returns per unit of risk. Adhi Karya Persero is currently generating about -0.08 per unit of risk. If you would invest  24,600  in Akbar Indomakmur Stimec on March 8, 2024 and sell it today you would earn a total of  15,200  from holding Akbar Indomakmur Stimec or generate 61.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Akbar Indomakmur Stimec  vs.  Adhi Karya Persero

Akbar Indomakmur Stimec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akbar Indomakmur Stimec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Adhi Karya Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adhi Karya Persero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Akbar Indomakmur and Adhi Karya

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

The idea behind Akbar Indomakmur Stimec and Adhi Karya Persero 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.