Correlation Between Indah Kiat and Medikaloka Hermina
Can any of the company-specific risk be diversified away by investing in both Indah Kiat and Medikaloka Hermina 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 Medikaloka Hermina 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 Medikaloka Hermina PT, you can compare the effects of market volatilities on Indah Kiat and Medikaloka Hermina 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 Medikaloka Hermina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indah Kiat and Medikaloka Hermina.
Diversification Opportunities for Indah Kiat and Medikaloka Hermina
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indah and Medikaloka is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Indah Kiat Pulp and Medikaloka Hermina PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medikaloka Hermina 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 Medikaloka Hermina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medikaloka Hermina has no effect on the direction of Indah Kiat i.e., Indah Kiat and Medikaloka Hermina go up and down completely randomly.
Pair Corralation between Indah Kiat and Medikaloka Hermina
Assuming the 90 days trading horizon Indah Kiat Pulp is expected to under-perform the Medikaloka Hermina. But the stock apears to be less risky and, when comparing its historical volatility, Indah Kiat Pulp is 1.99 times less risky than Medikaloka Hermina. The stock trades about -0.03 of its potential returns per unit of risk. The Medikaloka Hermina PT is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 112,500 in Medikaloka Hermina PT on February 21, 2024 and sell it today you would earn a total of 22,500 from holding Medikaloka Hermina PT or generate 20.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 94.74% |
Values | Daily Returns |
Indah Kiat Pulp vs. Medikaloka Hermina PT
Performance |
Timeline |
Indah Kiat Pulp |
Medikaloka Hermina |
Indah Kiat and Medikaloka Hermina Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Indah Kiat and Medikaloka Hermina
The main advantage of trading using opposite Indah Kiat and Medikaloka Hermina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indah Kiat position performs unexpectedly, Medikaloka Hermina 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 Medikaloka Hermina will offset losses from the drop in Medikaloka Hermina's long position.Indah Kiat vs. Semen Baturaja Persero | Indah Kiat vs. Bekasi Fajar Industrial | Indah Kiat vs. Saranacentral Bajatama Tbk | Indah Kiat vs. Salim Ivomas Pratama |
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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 Stocks Directory module to find actively traded stocks across global markets.
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