Correlation Between Inocycle Technology and Energi Mega

Can any of the company-specific risk be diversified away by investing in both Inocycle Technology and Energi Mega 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 Energi Mega 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 Energi Mega Persada, you can compare the effects of market volatilities on Inocycle Technology and Energi Mega 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 Energi Mega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inocycle Technology and Energi Mega.

Diversification Opportunities for Inocycle Technology and Energi Mega

0.62

Correlation Coefficient

Inocycle Technology  Energi Mega

Poor diversification

The 3 months correlation between Inocycle and Energi is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Inocycle Technology Tbk and Energi Mega Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energi Mega Persada 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 Energi Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energi Mega Persada has no effect on the direction of Inocycle Technology i.e., Inocycle Technology and Energi Mega go up and down completely randomly.

Pair Corralation between Inocycle Technology and Energi Mega

Assuming the 90 days trading horizon Inocycle Technology Tbk is expected to generate 0.41 times more return on investment than Energi Mega. However, Inocycle Technology Tbk is 2.44 times less risky than Energi Mega. It trades about -0.07 of its potential returns per unit of risk. Energi Mega Persada is currently generating about -0.08 per unit of risk. If you would invest  10,000  in Inocycle Technology Tbk on September 12, 2024 and sell it today you would lose (200.00) from holding Inocycle Technology Tbk or give up 2.0% of portfolio value over 90 days.

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

Inocycle Technology Tbk  vs.  Energi Mega Persada

Inocycle Technology Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Inocycle Technology Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Inocycle Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Energi Mega Persada

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energi Mega Persada are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Energi Mega disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inocycle Technology and Energi Mega

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

The idea behind Inocycle Technology Tbk and Energi Mega Persada 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.