Correlation Between Intanwijaya Internasional and Pelangi Indah

Can any of the company-specific risk be diversified away by investing in both Intanwijaya Internasional and Pelangi Indah 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 Intanwijaya Internasional and Pelangi Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intanwijaya Internasional Tbk and Pelangi Indah Canindo, you can compare the effects of market volatilities on Intanwijaya Internasional and Pelangi Indah 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 Intanwijaya Internasional with a short position of Pelangi Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intanwijaya Internasional and Pelangi Indah.

Diversification Opportunities for Intanwijaya Internasional and Pelangi Indah

0.39

Correlation Coefficient

Intanwijaya Internasional  Pelangi Indah

Weak diversification

The 3 months correlation between Intanwijaya and Pelangi is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Intanwijaya Internasional Tbk and Pelangi Indah Canindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pelangi Indah Canindo and Intanwijaya Internasional 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 Intanwijaya Internasional Tbk are associated (or correlated) with Pelangi Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pelangi Indah Canindo has no effect on the direction of Intanwijaya Internasional i.e., Intanwijaya Internasional and Pelangi Indah go up and down completely randomly.

Pair Corralation between Intanwijaya Internasional and Pelangi Indah

If you would invest  11,700  in Pelangi Indah Canindo on September 12, 2024 and sell it today you would earn a total of  2,500  from holding Pelangi Indah Canindo or generate 21.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.43%
Values	Daily Returns

Intanwijaya Internasional Tbk  vs.  Pelangi Indah Canindo

Intanwijaya Internasional

Risk-Adjusted Performance

0 of 100

Weak

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

Pelangi Indah Canindo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pelangi Indah Canindo are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pelangi Indah disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intanwijaya Internasional and Pelangi Indah

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

The idea behind Intanwijaya Internasional Tbk and Pelangi Indah Canindo 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.