Correlation Between Adaro Minerals and Golden Eagle
Can any of the company-specific risk be diversified away by investing in both Adaro Minerals and Golden Eagle 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 Golden Eagle 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 Golden Eagle Energy, you can compare the effects of market volatilities on Adaro Minerals and Golden Eagle 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 Golden Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Minerals and Golden Eagle.
Diversification Opportunities for Adaro Minerals and Golden Eagle
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adaro and Golden is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Minerals Indonesia and Golden Eagle Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Eagle Energy 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 Golden Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Eagle Energy has no effect on the direction of Adaro Minerals i.e., Adaro Minerals and Golden Eagle go up and down completely randomly.
Pair Corralation between Adaro Minerals and Golden Eagle
Assuming the 90 days trading horizon Adaro Minerals Indonesia is expected to under-perform the Golden Eagle. In addition to that, Adaro Minerals is 1.23 times more volatile than Golden Eagle Energy. It trades about 0.0 of its total potential returns per unit of risk. Golden Eagle Energy is currently generating about 0.02 per unit of volatility. If you would invest 64,628 in Golden Eagle Energy on August 26, 2024 and sell it today you would earn a total of 6,872 from holding Golden Eagle Energy or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adaro Minerals Indonesia vs. Golden Eagle Energy
Performance |
| Timeline |
| Adaro Minerals Indonesia |
| Golden Eagle Energy |
Adaro Minerals and Golden Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Minerals and Golden Eagle
The main advantage of trading using opposite Adaro Minerals and Golden Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Minerals position performs unexpectedly, Golden Eagle 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 Golden Eagle will offset losses from the drop in Golden Eagle'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 |
| Golden Eagle vs. Petrosea Tbk | Golden Eagle vs. Harum Energy Tbk | Golden Eagle vs. Perdana Karya Perkasa | Golden Eagle vs. Samindo Resources Tbk |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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