Correlation Between Smurfit Kappa and INDOSAT B

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

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

Diversification Opportunities for Smurfit Kappa and INDOSAT B

-0.79

Correlation Coefficient

Smurfit Kappa  INDOSAT B

Pay attention - limited upside

The 3 months correlation between Smurfit and INDOSAT is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and INDOSAT B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOSAT B and Smurfit Kappa 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 Smurfit Kappa Group 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 Smurfit Kappa i.e., Smurfit Kappa and INDOSAT B go up and down completely randomly.

Pair Corralation between Smurfit Kappa and INDOSAT B

Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 2.15 times more return on investment than INDOSAT B. However, Smurfit Kappa is 2.15 times more volatile than INDOSAT B . It trades about 0.08 of its potential returns per unit of risk. INDOSAT B is currently generating about -0.07 per unit of risk. If you would invest  4,471  in Smurfit Kappa Group on September 27, 2024 and sell it today you would earn a total of  589.00  from holding Smurfit Kappa Group or generate 13.17% return on investment over 90 days.

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

Smurfit Kappa Group  vs.  INDOSAT B

Smurfit Kappa Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Smurfit Kappa Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Smurfit Kappa reported solid returns over the last few months and may actually be approaching a breakup point.

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 Smurfit Kappa and INDOSAT B

The main advantage of trading using opposite Smurfit Kappa and INDOSAT B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa 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 Smurfit Kappa Group 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..