Correlation Between Adaro Minerals and Sunson Textile
Can any of the company-specific risk be diversified away by investing in both Adaro Minerals and Sunson Textile 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 Sunson Textile 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 Sunson Textile Manufacturer, you can compare the effects of market volatilities on Adaro Minerals and Sunson Textile 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 Sunson Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Minerals and Sunson Textile.
Diversification Opportunities for Adaro Minerals and Sunson Textile
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Adaro and Sunson is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Minerals Indonesia and Sunson Textile Manufacturer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunson Textile Manuf 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 Sunson Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunson Textile Manuf has no effect on the direction of Adaro Minerals i.e., Adaro Minerals and Sunson Textile go up and down completely randomly.
Pair Corralation between Adaro Minerals and Sunson Textile
Assuming the 90 days trading horizon Adaro Minerals Indonesia is expected to under-perform the Sunson Textile. But the stock apears to be less risky and, when comparing its historical volatility, Adaro Minerals Indonesia is 1.8 times less risky than Sunson Textile. The stock trades about -0.28 of its potential returns per unit of risk. The Sunson Textile Manufacturer is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 16,800 in Sunson Textile Manufacturer on August 30, 2024 and sell it today you would earn a total of 1,900 from holding Sunson Textile Manufacturer or generate 11.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adaro Minerals Indonesia vs. Sunson Textile Manufacturer
Performance |
| Timeline |
| Adaro Minerals Indonesia |
| Sunson Textile Manuf |
Adaro Minerals and Sunson Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Minerals and Sunson Textile
The main advantage of trading using opposite Adaro Minerals and Sunson Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Minerals position performs unexpectedly, Sunson Textile 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 Sunson Textile will offset losses from the drop in Sunson Textile's long position.| Adaro Minerals vs. PT Dewi Shri | Adaro Minerals vs. PT Hetzer Medical | Adaro Minerals vs. Wir Asia Tbk | Adaro Minerals vs. Bangun Karya Perkasa |
| Sunson Textile vs. Pembangunan Jaya Ancol | Sunson Textile vs. Panorama Sentrawisata Tbk | Sunson Textile vs. Millennium Pharmacon International | Sunson Textile vs. Tempo Inti Media |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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