Correlation Between Adaro Energy and Timah Persero
Can any of the company-specific risk be diversified away by investing in both Adaro Energy and Timah Persero 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 Timah Persero 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 Timah Persero Tbk, you can compare the effects of market volatilities on Adaro Energy and Timah Persero 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 Timah Persero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Energy and Timah Persero.
Diversification Opportunities for Adaro Energy and Timah Persero
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adaro and Timah is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Energy Tbk and Timah Persero Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timah Persero 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 Timah Persero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timah Persero Tbk has no effect on the direction of Adaro Energy i.e., Adaro Energy and Timah Persero go up and down completely randomly.
Pair Corralation between Adaro Energy and Timah Persero
Assuming the 90 days trading horizon Adaro Energy Tbk is expected to under-perform the Timah Persero. In addition to that, Adaro Energy is 1.36 times more volatile than Timah Persero Tbk. It trades about -0.19 of its total potential returns per unit of risk. Timah Persero Tbk is currently generating about -0.17 per unit of volatility. If you would invest 133,000 in Timah Persero Tbk on August 31, 2024 and sell it today you would lose (21,000) from holding Timah Persero Tbk or give up 15.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adaro Energy Tbk vs. Timah Persero Tbk
Performance |
| Timeline |
| Adaro Energy Tbk |
| Timah Persero Tbk |
Adaro Energy and Timah Persero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Energy and Timah Persero
The main advantage of trading using opposite Adaro Energy and Timah Persero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Energy position performs unexpectedly, Timah Persero 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 Timah Persero will offset losses from the drop in Timah Persero'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 |
| Timah Persero vs. Vale Indonesia Tbk | Timah Persero vs. Aneka Tambang Persero | Timah Persero vs. Bukit Asam Tbk | Timah Persero vs. Perusahaan Gas Negara |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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