Correlation Between Colorpak Indonesia and Austindo Nusantara

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

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

Diversification Opportunities for Colorpak Indonesia and Austindo Nusantara

-0.38

Correlation Coefficient

Colorpak Indonesia  Austindo Nusantara

Very good diversification

The 3 months correlation between Colorpak and Austindo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Colorpak Indonesia Tbk and Austindo Nusantara Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austindo Nusantara Jaya and Colorpak Indonesia 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 Colorpak Indonesia Tbk are associated (or correlated) with Austindo Nusantara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austindo Nusantara Jaya has no effect on the direction of Colorpak Indonesia i.e., Colorpak Indonesia and Austindo Nusantara go up and down completely randomly.

Pair Corralation between Colorpak Indonesia and Austindo Nusantara

Assuming the 90 days trading horizon Colorpak Indonesia Tbk is expected to under-perform the Austindo Nusantara. But the stock apears to be less risky and, when comparing its historical volatility, Colorpak Indonesia Tbk is 2.12 times less risky than Austindo Nusantara. The stock trades about -0.04 of its potential returns per unit of risk. The Austindo Nusantara Jaya is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  69,500  in Austindo Nusantara Jaya on September 13, 2024 and sell it today you would earn a total of  4,500  from holding Austindo Nusantara Jaya or generate 6.47% return on investment over 90 days.

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

Colorpak Indonesia Tbk  vs.  Austindo Nusantara Jaya

Colorpak Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colorpak Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Colorpak Indonesia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Austindo Nusantara Jaya

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austindo Nusantara Jaya are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Austindo Nusantara may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Colorpak Indonesia and Austindo Nusantara

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

The idea behind Colorpak Indonesia Tbk and Austindo Nusantara Jaya 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.