Correlation Between Inocycle Technology and Alumindo Light

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

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

Diversification Opportunities for Inocycle Technology and Alumindo Light

0.6

Correlation Coefficient

Inocycle Technology  Alumindo Light

Poor diversification

The 3 months correlation between Inocycle and Alumindo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Inocycle Technology Tbk and Alumindo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumindo Light Metal and Inocycle Technology 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 Inocycle Technology Tbk are associated (or correlated) with Alumindo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumindo Light Metal has no effect on the direction of Inocycle Technology i.e., Inocycle Technology and Alumindo Light go up and down completely randomly.

Pair Corralation between Inocycle Technology and Alumindo Light

Assuming the 90 days trading horizon Inocycle Technology is expected to generate 1.86 times less return on investment than Alumindo Light. But when comparing it to its historical volatility, Inocycle Technology Tbk is 1.06 times less risky than Alumindo Light. It trades about 0.04 of its potential returns per unit of risk. Alumindo Light Metal is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,600  in Alumindo Light Metal on September 19, 2024 and sell it today you would earn a total of  800.00  from holding Alumindo Light Metal or generate 12.12% return on investment over 90 days.

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

Inocycle Technology Tbk  vs.  Alumindo Light Metal

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.

Alumindo Light Metal

Risk-Adjusted Performance

5 of 100

Insignificant

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

Pair Trading with Inocycle Technology and Alumindo Light

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

The idea behind Inocycle Technology Tbk and Alumindo Light Metal 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.