Correlation Between Humpuss Intermoda and Inocycle Technology

Can any of the company-specific risk be diversified away by investing in both Humpuss Intermoda and Inocycle Technology 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 Humpuss Intermoda and Inocycle Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Humpuss Intermoda Transportasi and Inocycle Technology Tbk, you can compare the effects of market volatilities on Humpuss Intermoda and Inocycle Technology 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 Humpuss Intermoda with a short position of Inocycle Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humpuss Intermoda and Inocycle Technology.

Diversification Opportunities for Humpuss Intermoda and Inocycle Technology

0.63

Correlation Coefficient

Humpuss Intermoda  Inocycle Technology

Poor diversification

The 3 months correlation between Humpuss and Inocycle is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Humpuss Intermoda Transportasi and Inocycle Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inocycle Technology Tbk and Humpuss Intermoda 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 Humpuss Intermoda Transportasi are associated (or correlated) with Inocycle Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inocycle Technology Tbk has no effect on the direction of Humpuss Intermoda i.e., Humpuss Intermoda and Inocycle Technology go up and down completely randomly.

Pair Corralation between Humpuss Intermoda and Inocycle Technology

Assuming the 90 days trading horizon Humpuss Intermoda Transportasi is expected to generate 1.42 times more return on investment than Inocycle Technology. However, Humpuss Intermoda is 1.42 times more volatile than Inocycle Technology Tbk. It trades about 0.19 of its potential returns per unit of risk. Inocycle Technology Tbk is currently generating about 0.02 per unit of risk. If you would invest  29,800  in Humpuss Intermoda Transportasi on September 19, 2024 and sell it today you would earn a total of  11,600  from holding Humpuss Intermoda Transportasi or generate 38.93% return on investment over 90 days.

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

Humpuss Intermoda Transportasi  vs.  Inocycle Technology Tbk

Humpuss Intermoda

Risk-Adjusted Performance

13 of 100

Good

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

Inocycle Technology Tbk

Risk-Adjusted Performance

3 of 100

Weak

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

Pair Trading with Humpuss Intermoda and Inocycle Technology

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

The idea behind Humpuss Intermoda Transportasi and Inocycle Technology 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 Commodity Directory module to find actively traded commodities issued by global exchanges.