Correlation Between Indika Energy and Pelayaran Nelly

Can any of the company-specific risk be diversified away by investing in both Indika Energy and Pelayaran Nelly 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 Indika Energy and Pelayaran Nelly into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indika Energy Tbk and Pelayaran Nelly Dwi, you can compare the effects of market volatilities on Indika Energy and Pelayaran Nelly 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 Indika Energy with a short position of Pelayaran Nelly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indika Energy and Pelayaran Nelly.

Diversification Opportunities for Indika Energy and Pelayaran Nelly

0.36

Correlation Coefficient

Indika Energy  Pelayaran Nelly

Weak diversification

The 3 months correlation between Indika and Pelayaran is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Indika Energy Tbk and Pelayaran Nelly Dwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pelayaran Nelly Dwi and Indika Energy 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 Indika Energy Tbk are associated (or correlated) with Pelayaran Nelly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pelayaran Nelly Dwi has no effect on the direction of Indika Energy i.e., Indika Energy and Pelayaran Nelly go up and down completely randomly.

Pair Corralation between Indika Energy and Pelayaran Nelly

Assuming the 90 days trading horizon Indika Energy Tbk is expected to under-perform the Pelayaran Nelly. In addition to that, Indika Energy is 2.54 times more volatile than Pelayaran Nelly Dwi. It trades about -0.1 of its total potential returns per unit of risk. Pelayaran Nelly Dwi is currently generating about -0.07 per unit of volatility. If you would invest  46,200  in Pelayaran Nelly Dwi on September 29, 2024 and sell it today you would lose (2,200) from holding Pelayaran Nelly Dwi or give up 4.76% of portfolio value over 90 days.

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

Indika Energy Tbk  vs.  Pelayaran Nelly Dwi

Indika Energy Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indika Energy Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pelayaran Nelly Dwi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Indika Energy and Pelayaran Nelly

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

The idea behind Indika Energy Tbk and Pelayaran Nelly Dwi 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.