Correlation Between PT Indosat and ACCSYS TECHPLC

Can any of the company-specific risk be diversified away by investing in both PT Indosat and ACCSYS TECHPLC 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 PT Indosat and ACCSYS TECHPLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Indosat Tbk and ACCSYS TECHPLC EO, you can compare the effects of market volatilities on PT Indosat and ACCSYS TECHPLC 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 PT Indosat with a short position of ACCSYS TECHPLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indosat and ACCSYS TECHPLC.

Diversification Opportunities for PT Indosat and ACCSYS TECHPLC

0.47

Correlation Coefficient

PT Indosat  ACCSYS TECHPLC

Very weak diversification

The 3 months correlation between IDO1 and ACCSYS is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding PT Indosat Tbk and ACCSYS TECHPLC EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCSYS TECHPLC EO and PT Indosat 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 PT Indosat Tbk are associated (or correlated) with ACCSYS TECHPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACCSYS TECHPLC EO has no effect on the direction of PT Indosat i.e., PT Indosat and ACCSYS TECHPLC go up and down completely randomly.

Pair Corralation between PT Indosat and ACCSYS TECHPLC

Assuming the 90 days trading horizon PT Indosat Tbk is expected to generate 4.31 times more return on investment than ACCSYS TECHPLC. However, PT Indosat is 4.31 times more volatile than ACCSYS TECHPLC EO. It trades about -0.01 of its potential returns per unit of risk. ACCSYS TECHPLC EO is currently generating about -0.07 per unit of risk. If you would invest  16.00  in PT Indosat Tbk on September 22, 2024 and sell it today you would lose (4.00) from holding PT Indosat Tbk or give up 25.0% of portfolio value over 90 days.

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

PT Indosat Tbk  vs.  ACCSYS TECHPLC EO

PT Indosat Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indosat Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Indosat is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ACCSYS TECHPLC EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACCSYS TECHPLC EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PT Indosat and ACCSYS TECHPLC

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

The idea behind PT Indosat Tbk and ACCSYS TECHPLC EO 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.

Check out your portfolio center.

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.