Correlation Between Fortune Mate and Kedawung Setia

Can any of the company-specific risk be diversified away by investing in both Fortune Mate and Kedawung Setia 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 Fortune Mate and Kedawung Setia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fortune Mate Indonesia and Kedawung Setia Industrial, you can compare the effects of market volatilities on Fortune Mate and Kedawung Setia 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 Fortune Mate with a short position of Kedawung Setia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Mate and Kedawung Setia.

Diversification Opportunities for Fortune Mate and Kedawung Setia

-0.27

Correlation Coefficient

Fortune Mate  Kedawung Setia

Very good diversification

The 3 months correlation between Fortune and Kedawung is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Mate Indonesia and Kedawung Setia Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kedawung Setia Industrial and Fortune Mate 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 Fortune Mate Indonesia are associated (or correlated) with Kedawung Setia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kedawung Setia Industrial has no effect on the direction of Fortune Mate i.e., Fortune Mate and Kedawung Setia go up and down completely randomly.

Pair Corralation between Fortune Mate and Kedawung Setia

Assuming the 90 days trading horizon Fortune Mate Indonesia is expected to generate 2.01 times more return on investment than Kedawung Setia. However, Fortune Mate is 2.01 times more volatile than Kedawung Setia Industrial. It trades about 0.15 of its potential returns per unit of risk. Kedawung Setia Industrial is currently generating about 0.07 per unit of risk. If you would invest  16,200  in Fortune Mate Indonesia on September 13, 2024 and sell it today you would earn a total of  38,300  from holding Fortune Mate Indonesia or generate 236.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.31%
Values	Daily Returns

Fortune Mate Indonesia  vs.  Kedawung Setia Industrial

Fortune Mate Indonesia

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Mate Indonesia are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Fortune Mate disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kedawung Setia Industrial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kedawung Setia Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Kedawung Setia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fortune Mate and Kedawung Setia

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

The idea behind Fortune Mate Indonesia and Kedawung Setia Industrial 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.