Correlation Between Adaro Energy and PT MNC
Can any of the company-specific risk be diversified away by investing in both Adaro Energy and PT MNC 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 PT MNC 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 PT MNC Energy, you can compare the effects of market volatilities on Adaro Energy and PT MNC 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 PT MNC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Energy and PT MNC.
Diversification Opportunities for Adaro Energy and PT MNC
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adaro and IATA is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Energy Tbk and PT MNC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT MNC Energy 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 PT MNC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT MNC Energy has no effect on the direction of Adaro Energy i.e., Adaro Energy and PT MNC go up and down completely randomly.
Pair Corralation between Adaro Energy and PT MNC
Assuming the 90 days trading horizon Adaro Energy Tbk is expected to generate 1.19 times more return on investment than PT MNC. However, Adaro Energy is 1.19 times more volatile than PT MNC Energy. It trades about 0.09 of its potential returns per unit of risk. PT MNC Energy is currently generating about 0.01 per unit of risk. If you would invest 106,521 in Adaro Energy Tbk on October 25, 2024 and sell it today you would earn a total of 125,479 from holding Adaro Energy Tbk or generate 117.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adaro Energy Tbk vs. PT MNC Energy
Performance |
| Timeline |
| Adaro Energy Tbk |
| PT MNC Energy |
Adaro Energy and PT MNC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Energy and PT MNC
The main advantage of trading using opposite Adaro Energy and PT MNC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Energy position performs unexpectedly, PT MNC 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 PT MNC will offset losses from the drop in PT MNC'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 |
| PT MNC vs. Mnc Investama Tbk | PT MNC vs. Exploitasi Energi Indonesia | PT MNC vs. Smartfren Telecom Tbk | PT MNC vs. Humpuss Intermoda Transportasi |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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