Correlation Between Adaro Energy and Emdeki Utama
Can any of the company-specific risk be diversified away by investing in both Adaro Energy and Emdeki Utama 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 Emdeki Utama 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 Emdeki Utama Tbk, you can compare the effects of market volatilities on Adaro Energy and Emdeki Utama 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 Emdeki Utama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Energy and Emdeki Utama.
Diversification Opportunities for Adaro Energy and Emdeki Utama
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Adaro and Emdeki is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Energy Tbk and Emdeki Utama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emdeki Utama 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 Emdeki Utama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emdeki Utama Tbk has no effect on the direction of Adaro Energy i.e., Adaro Energy and Emdeki Utama go up and down completely randomly.
Pair Corralation between Adaro Energy and Emdeki Utama
Assuming the 90 days trading horizon Adaro Energy Tbk is expected to generate 3.2 times more return on investment than Emdeki Utama. However, Adaro Energy is 3.2 times more volatile than Emdeki Utama Tbk. It trades about 0.03 of its potential returns per unit of risk. Emdeki Utama Tbk is currently generating about 0.0 per unit of risk. If you would invest 188,146 in Adaro Energy Tbk on August 31, 2024 and sell it today you would earn a total of 19,854 from holding Adaro Energy Tbk or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adaro Energy Tbk vs. Emdeki Utama Tbk
Performance |
| Timeline |
| Adaro Energy Tbk |
| Emdeki Utama Tbk |
Adaro Energy and Emdeki Utama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Energy and Emdeki Utama
The main advantage of trading using opposite Adaro Energy and Emdeki Utama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Energy position performs unexpectedly, Emdeki Utama 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 Emdeki Utama will offset losses from the drop in Emdeki Utama'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 |
| Emdeki Utama vs. Panca Budi Idaman | Emdeki Utama vs. Intanwijaya Internasional Tbk | Emdeki Utama vs. Hartadinata Abadi Tbk | Emdeki Utama vs. Unggul Indah Cahaya |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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