Correlation Between PT Indosat and Graphic Packaging

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

By analyzing existing cross correlation between PT Indosat Tbk and Graphic Packaging Holding, you can compare the effects of market volatilities on PT Indosat and Graphic Packaging 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 Indosat with a short position of Graphic Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indosat and Graphic Packaging.

Diversification Opportunities for PT Indosat and Graphic Packaging

-0.57

Correlation Coefficient

PT Indosat  Graphic Packaging

Excellent diversification

The 3 months correlation between IDO1 and Graphic is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PT Indosat Tbk and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding and PT Indosat 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 Indosat Tbk are associated (or correlated) with Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of PT Indosat i.e., PT Indosat and Graphic Packaging go up and down completely randomly.

Pair Corralation between PT Indosat and Graphic Packaging

Assuming the 90 days trading horizon PT Indosat Tbk is expected to generate 5.38 times more return on investment than Graphic Packaging. However, PT Indosat is 5.38 times more volatile than Graphic Packaging Holding. It trades about 0.12 of its potential returns per unit of risk. Graphic Packaging Holding is currently generating about -0.08 per unit of risk. If you would invest  6.52  in PT Indosat Tbk on April 22, 2025 and sell it today you would earn a total of  4.48  from holding PT Indosat Tbk or generate 68.71% return on investment over 90 days.

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

PT Indosat Tbk  vs.  Graphic Packaging Holding

PT Indosat Tbk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indosat Tbk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Indosat reported solid returns over the last few months and may actually be approaching a breakup point.

Graphic Packaging Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Graphic Packaging Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PT Indosat and Graphic Packaging

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

The idea behind PT Indosat Tbk and Graphic Packaging Holding 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.