Correlation Between Ashmore Asset and Pertamina Geothermal
Can any of the company-specific risk be diversified away by investing in both Ashmore Asset and Pertamina Geothermal 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 Ashmore Asset and Pertamina Geothermal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashmore Asset Management and Pertamina Geothermal Energy, you can compare the effects of market volatilities on Ashmore Asset and Pertamina Geothermal 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 Ashmore Asset with a short position of Pertamina Geothermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Asset and Pertamina Geothermal.
Diversification Opportunities for Ashmore Asset and Pertamina Geothermal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ashmore and Pertamina is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Asset Management and Pertamina Geothermal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pertamina Geothermal and Ashmore Asset 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 Ashmore Asset Management are associated (or correlated) with Pertamina Geothermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pertamina Geothermal has no effect on the direction of Ashmore Asset i.e., Ashmore Asset and Pertamina Geothermal go up and down completely randomly.
Pair Corralation between Ashmore Asset and Pertamina Geothermal
Assuming the 90 days trading horizon Ashmore Asset Management is expected to generate 1.7 times more return on investment than Pertamina Geothermal. However, Ashmore Asset is 1.7 times more volatile than Pertamina Geothermal Energy. It trades about -0.05 of its potential returns per unit of risk. Pertamina Geothermal Energy is currently generating about -0.08 per unit of risk. If you would invest 94,359 in Ashmore Asset Management on September 3, 2024 and sell it today you would lose (24,359) from holding Ashmore Asset Management or give up 25.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Asset Management vs. Pertamina Geothermal Energy
Performance |
| Timeline |
| Ashmore Asset Management |
| Pertamina Geothermal |
Ashmore Asset and Pertamina Geothermal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Asset and Pertamina Geothermal
The main advantage of trading using opposite Ashmore Asset and Pertamina Geothermal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Asset position performs unexpectedly, Pertamina Geothermal 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 Pertamina Geothermal will offset losses from the drop in Pertamina Geothermal's long position.| Ashmore Asset vs. Bank Amar Indonesia | Ashmore Asset vs. Bhakti Multi Artha | Ashmore Asset vs. Mitra Pinasthika Mustika | Ashmore Asset vs. Jakarta Int Hotels |
| Pertamina Geothermal vs. Chandra Asri Petrochemical | Pertamina Geothermal vs. Bank Negara Indonesia | Pertamina Geothermal vs. Sumber Alfaria Trijaya | Pertamina Geothermal vs. Mitra Pinasthika Mustika |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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