Correlation Between Autopedia Sukses and Archi Indonesia

Can any of the company-specific risk be diversified away by investing in both Autopedia Sukses and Archi Indonesia 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 Autopedia Sukses and Archi Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Autopedia Sukses Lestari and Archi Indonesia Tbk, you can compare the effects of market volatilities on Autopedia Sukses and Archi Indonesia 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 Autopedia Sukses with a short position of Archi Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autopedia Sukses and Archi Indonesia.

Diversification Opportunities for Autopedia Sukses and Archi Indonesia

0.85

Correlation Coefficient

Autopedia Sukses  Archi Indonesia

Very poor diversification

The 3 months correlation between Autopedia and Archi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Autopedia Sukses Lestari and Archi Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archi Indonesia Tbk and Autopedia Sukses 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 Autopedia Sukses Lestari are associated (or correlated) with Archi Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archi Indonesia Tbk has no effect on the direction of Autopedia Sukses i.e., Autopedia Sukses and Archi Indonesia go up and down completely randomly.

Pair Corralation between Autopedia Sukses and Archi Indonesia

Assuming the 90 days trading horizon Autopedia Sukses Lestari is expected to under-perform the Archi Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, Autopedia Sukses Lestari is 1.06 times less risky than Archi Indonesia. The stock trades about -0.18 of its potential returns per unit of risk. The Archi Indonesia Tbk is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  28,400  in Archi Indonesia Tbk on September 19, 2024 and sell it today you would lose (2,600) from holding Archi Indonesia Tbk or give up 9.15% of portfolio value over 90 days.

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

Autopedia Sukses Lestari  vs.  Archi Indonesia Tbk

Autopedia Sukses Lestari

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autopedia Sukses Lestari 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Archi Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archi Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Autopedia Sukses and Archi Indonesia

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

The idea behind Autopedia Sukses Lestari and Archi Indonesia Tbk 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.