Correlation Between Indah Kiat and Agung Semesta

Can any of the company-specific risk be diversified away by investing in both Indah Kiat and Agung Semesta 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 Agung Semesta 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 Agung Semesta Sejahtera, you can compare the effects of market volatilities on Indah Kiat and Agung Semesta 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 Agung Semesta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indah Kiat and Agung Semesta.

Diversification Opportunities for Indah Kiat and Agung Semesta

-0.81

Correlation Coefficient

Indah Kiat  Agung Semesta

Pay attention - limited upside

The 3 months correlation between Indah and Agung is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Indah Kiat Pulp and Agung Semesta Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agung Semesta Sejahtera 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 Agung Semesta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agung Semesta Sejahtera has no effect on the direction of Indah Kiat i.e., Indah Kiat and Agung Semesta go up and down completely randomly.

Pair Corralation between Indah Kiat and Agung Semesta

Assuming the 90 days trading horizon Indah Kiat Pulp is expected to generate 0.47 times more return on investment than Agung Semesta. However, Indah Kiat Pulp is 2.13 times less risky than Agung Semesta. It trades about 0.02 of its potential returns per unit of risk. Agung Semesta Sejahtera is currently generating about -0.1 per unit of risk. If you would invest  931,034  in Indah Kiat Pulp on February 14, 2024 and sell it today you would earn a total of  41,466  from holding Indah Kiat Pulp or generate 4.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.7%
Values	Daily Returns

Indah Kiat Pulp  vs.  Agung Semesta Sejahtera

Indah Kiat Pulp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Indah Kiat Pulp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Indah Kiat disclosed solid returns over the last few months and may actually be approaching a breakup point.

Agung Semesta Sejahtera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agung Semesta Sejahtera 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 June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Indah Kiat and Agung Semesta

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

The idea behind Indah Kiat Pulp and Agung Semesta Sejahtera 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.