Correlation Between PT Homeco and Indo Oil

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Can any of the company-specific risk be diversified away by investing in both PT Homeco and Indo Oil 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 PT Homeco and Indo Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Homeco Victoria and Indo Oil Perkasa, you can compare the effects of market volatilities on PT Homeco and Indo Oil 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 PT Homeco with a short position of Indo Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Homeco and Indo Oil.

Diversification Opportunities for PT Homeco and Indo Oil

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between LIVE and Indo is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding PT Homeco Victoria and Indo Oil Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Oil Perkasa and PT Homeco 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 PT Homeco Victoria are associated (or correlated) with Indo Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Oil Perkasa has no effect on the direction of PT Homeco i.e., PT Homeco and Indo Oil go up and down completely randomly.

Pair Corralation between PT Homeco and Indo Oil

Assuming the 90 days trading horizon PT Homeco Victoria is expected to generate 3.02 times more return on investment than Indo Oil. However, PT Homeco is 3.02 times more volatile than Indo Oil Perkasa. It trades about 0.03 of its potential returns per unit of risk. Indo Oil Perkasa is currently generating about -0.03 per unit of risk. If you would invest  18,200  in PT Homeco Victoria on September 16, 2024 and sell it today you would earn a total of  500.00  from holding PT Homeco Victoria or generate 2.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PT Homeco Victoria  vs.  Indo Oil Perkasa

 Performance 
       Timeline  
PT Homeco Victoria 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in PT Homeco Victoria are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Homeco may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Indo Oil Perkasa 

Risk-Adjusted Performance

0 of 100

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

PT Homeco and Indo Oil Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PT Homeco and Indo Oil

The main advantage of trading using opposite PT Homeco and Indo Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Homeco position performs unexpectedly, Indo Oil 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 Indo Oil will offset losses from the drop in Indo Oil's long position.
The idea behind PT Homeco Victoria and Indo Oil Perkasa 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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