Correlation Between Adaro Energy and Elnusa Tbk
Can any of the company-specific risk be diversified away by investing in both Adaro Energy and Elnusa Tbk 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 Elnusa Tbk 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 Elnusa Tbk, you can compare the effects of market volatilities on Adaro Energy and Elnusa Tbk 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 Elnusa Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Energy and Elnusa Tbk.
Diversification Opportunities for Adaro Energy and Elnusa Tbk
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Adaro and Elnusa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Energy Tbk and Elnusa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elnusa Tbk 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 Elnusa Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elnusa Tbk has no effect on the direction of Adaro Energy i.e., Adaro Energy and Elnusa Tbk go up and down completely randomly.
Pair Corralation between Adaro Energy and Elnusa Tbk
Assuming the 90 days trading horizon Adaro Energy Tbk is expected to under-perform the Elnusa Tbk. In addition to that, Adaro Energy is 1.89 times more volatile than Elnusa Tbk. It trades about -0.05 of its total potential returns per unit of risk. Elnusa Tbk is currently generating about 0.03 per unit of volatility. If you would invest 42,200 in Elnusa Tbk on September 1, 2024 and sell it today you would earn a total of 2,000 from holding Elnusa Tbk or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Adaro Energy Tbk vs. Elnusa Tbk
Performance |
| Timeline |
| Adaro Energy Tbk |
| Elnusa Tbk |
Adaro Energy and Elnusa Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Energy and Elnusa Tbk
The main advantage of trading using opposite Adaro Energy and Elnusa Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Energy position performs unexpectedly, Elnusa Tbk 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 Elnusa Tbk will offset losses from the drop in Elnusa Tbk's long position.| Adaro Energy vs. Bukit Asam Tbk | Adaro Energy vs. Aneka Tambang Persero | Adaro Energy vs. Perusahaan Gas Negara | Adaro Energy vs. Indo Tambangraya Megah |
| Elnusa Tbk vs. Mitrabahtera Segara Sejati | Elnusa Tbk vs. Weha Transportasi Indonesia | Elnusa Tbk vs. Rig Tenders Tbk | Elnusa Tbk vs. Rukun Raharja 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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