Correlation Between Kencana Energi and Trans Power
Can any of the company-specific risk be diversified away by investing in both Kencana Energi and Trans Power 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 Kencana Energi and Trans Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kencana Energi Lestari and Trans Power Marine, you can compare the effects of market volatilities on Kencana Energi and Trans Power 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 Kencana Energi with a short position of Trans Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kencana Energi and Trans Power.
Diversification Opportunities for Kencana Energi and Trans Power
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kencana and Trans is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kencana Energi Lestari and Trans Power Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trans Power Marine and Kencana Energi 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 Kencana Energi Lestari are associated (or correlated) with Trans Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trans Power Marine has no effect on the direction of Kencana Energi i.e., Kencana Energi and Trans Power go up and down completely randomly.
Pair Corralation between Kencana Energi and Trans Power
Assuming the 90 days trading horizon Kencana Energi Lestari is expected to generate 0.52 times more return on investment than Trans Power. However, Kencana Energi Lestari is 1.93 times less risky than Trans Power. It trades about -0.18 of its potential returns per unit of risk. Trans Power Marine is currently generating about -0.1 per unit of risk. If you would invest 69,500 in Kencana Energi Lestari on September 20, 2024 and sell it today you would lose (9,000) from holding Kencana Energi Lestari or give up 12.95% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Kencana Energi Lestari vs. Trans Power Marine
Performance |
Timeline |
Kencana Energi Lestari |
Trans Power Marine |
Kencana Energi and Trans Power Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kencana Energi and Trans Power
The main advantage of trading using opposite Kencana Energi and Trans Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kencana Energi position performs unexpectedly, Trans Power 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 Trans Power will offset losses from the drop in Trans Power's long position.Kencana Energi vs. PT Indonesia Kendaraan | Kencana Energi vs. Cikarang Listrindo Tbk | Kencana Energi vs. Jasa Armada Indonesia | Kencana Energi vs. Pelita Samudera Shipping |
Trans Power vs. PT Indonesia Kendaraan | Trans Power vs. Surya Toto Indonesia | Trans Power vs. Mitra Pinasthika Mustika | Trans Power vs. Integra Indocabinet Tbk |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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