Correlation Between KOMATSU and INDOSAT B

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

By analyzing existing cross correlation between KOMATSU LTD SPONS and INDOSAT B , you can compare the effects of market volatilities on KOMATSU and INDOSAT B 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 KOMATSU with a short position of INDOSAT B. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOMATSU and INDOSAT B.

Diversification Opportunities for KOMATSU and INDOSAT B

-0.45

Correlation Coefficient

KOMATSU  INDOSAT B

Very good diversification

The 3 months correlation between KOMATSU and INDOSAT is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KOMATSU LTD SPONS and INDOSAT B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOSAT B and KOMATSU 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 KOMATSU LTD SPONS are associated (or correlated) with INDOSAT B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOSAT B has no effect on the direction of KOMATSU i.e., KOMATSU and INDOSAT B go up and down completely randomly.

Pair Corralation between KOMATSU and INDOSAT B

If you would invest  15.00  in INDOSAT B on September 27, 2024 and sell it today you would earn a total of  0.00  from holding INDOSAT B or generate 0.0% return on investment over 90 days.

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

KOMATSU LTD SPONS  vs.  INDOSAT B

KOMATSU LTD SPONS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KOMATSU LTD SPONS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, KOMATSU is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

INDOSAT B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDOSAT B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, INDOSAT B is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KOMATSU and INDOSAT B

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

The idea behind KOMATSU LTD SPONS and INDOSAT B 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .