Correlation Between Adaro Energy and Applied Blockchain
Can any of the company-specific risk be diversified away by investing in both Adaro Energy and Applied Blockchain 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 Energy and Applied Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adaro Energy Tbk and Applied Blockchain, you can compare the effects of market volatilities on Adaro Energy and Applied Blockchain 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 Energy with a short position of Applied Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Energy and Applied Blockchain.
Diversification Opportunities for Adaro Energy and Applied Blockchain
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Adaro and Applied is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Energy Tbk and Applied Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Blockchain and Adaro Energy 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 Energy Tbk are associated (or correlated) with Applied Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Blockchain has no effect on the direction of Adaro Energy i.e., Adaro Energy and Applied Blockchain go up and down completely randomly.
Pair Corralation between Adaro Energy and Applied Blockchain
Assuming the 90 days horizon Adaro Energy is expected to generate 2.13 times less return on investment than Applied Blockchain. In addition to that, Adaro Energy is 1.01 times more volatile than Applied Blockchain. It trades about 0.04 of its total potential returns per unit of risk. Applied Blockchain is currently generating about 0.08 per unit of volatility. If you would invest 160.00 in Applied Blockchain on August 28, 2024 and sell it today you would earn a total of 853.00 from holding Applied Blockchain or generate 533.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.15% |
| Values | Daily Returns |
Adaro Energy Tbk vs. Applied Blockchain
Performance |
| Timeline |
| Adaro Energy Tbk |
| Applied Blockchain |
Adaro Energy and Applied Blockchain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Energy and Applied Blockchain
The main advantage of trading using opposite Adaro Energy and Applied Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Energy position performs unexpectedly, Applied Blockchain 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 Applied Blockchain will offset losses from the drop in Applied Blockchain's long position.| Adaro Energy vs. Alliance Resource Partners | Adaro Energy vs. Astera Labs, Common | Adaro Energy vs. Autodesk | Adaro Energy vs. Applied Blockchain |
| Applied Blockchain vs. Magic Empire Global | Applied Blockchain vs. Zhong Yang Financial | Applied Blockchain vs. Netcapital | Applied Blockchain vs. Lazard |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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