Correlation Between Adaro Minerals and RMK Energy
Can any of the company-specific risk be diversified away by investing in both Adaro Minerals and RMK Energy 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 Adaro Minerals and RMK Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adaro Minerals Indonesia and RMK Energy PT, you can compare the effects of market volatilities on Adaro Minerals and RMK Energy 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 Adaro Minerals with a short position of RMK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Minerals and RMK Energy.
Diversification Opportunities for Adaro Minerals and RMK Energy
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Adaro and RMK is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Minerals Indonesia and RMK Energy PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMK Energy PT and Adaro Minerals 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 Adaro Minerals Indonesia are associated (or correlated) with RMK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMK Energy PT has no effect on the direction of Adaro Minerals i.e., Adaro Minerals and RMK Energy go up and down completely randomly.
Pair Corralation between Adaro Minerals and RMK Energy
Assuming the 90 days trading horizon Adaro Minerals Indonesia is expected to generate 1.29 times more return on investment than RMK Energy. However, Adaro Minerals is 1.29 times more volatile than RMK Energy PT. It trades about 0.03 of its potential returns per unit of risk. RMK Energy PT is currently generating about -0.03 per unit of risk. If you would invest 115,000 in Adaro Minerals Indonesia on August 29, 2024 and sell it today you would earn a total of 13,000 from holding Adaro Minerals Indonesia or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adaro Minerals Indonesia vs. RMK Energy PT
Performance |
| Timeline |
| Adaro Minerals Indonesia |
| RMK Energy PT |
Adaro Minerals and RMK Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Minerals and RMK Energy
The main advantage of trading using opposite Adaro Minerals and RMK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Minerals position performs unexpectedly, RMK Energy 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 RMK Energy will offset losses from the drop in RMK Energy's long position.| Adaro Minerals vs. Bank Artos Indonesia | Adaro Minerals vs. GoTo Gojek Tokopedia | Adaro Minerals vs. Elang Mahkota Teknologi | Adaro Minerals vs. PT Bukalapak |
| RMK Energy vs. Adaro Minerals Indonesia | RMK Energy vs. Prima Andalan Mandiri | RMK Energy vs. Sumber Global Energy | RMK Energy vs. Golden Eagle Energy |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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