Correlation Between Adi Sarana and Adaro Minerals
Can any of the company-specific risk be diversified away by investing in both Adi Sarana and Adaro Minerals 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 Adi Sarana and Adaro Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adi Sarana Armada and Adaro Minerals Indonesia, you can compare the effects of market volatilities on Adi Sarana and Adaro Minerals 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 Adi Sarana with a short position of Adaro Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adi Sarana and Adaro Minerals.
Diversification Opportunities for Adi Sarana and Adaro Minerals
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Adi and Adaro is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Adi Sarana Armada and Adaro Minerals Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Minerals Indonesia and Adi Sarana 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 Adi Sarana Armada are associated (or correlated) with Adaro Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Minerals Indonesia has no effect on the direction of Adi Sarana i.e., Adi Sarana and Adaro Minerals go up and down completely randomly.
Pair Corralation between Adi Sarana and Adaro Minerals
Assuming the 90 days trading horizon Adi Sarana Armada is expected to generate 0.83 times more return on investment than Adaro Minerals. However, Adi Sarana Armada is 1.2 times less risky than Adaro Minerals. It trades about -0.15 of its potential returns per unit of risk. Adaro Minerals Indonesia is currently generating about -0.22 per unit of risk. If you would invest 74,919 in Adi Sarana Armada on August 31, 2024 and sell it today you would lose (4,419) from holding Adi Sarana Armada or give up 5.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Adi Sarana Armada vs. Adaro Minerals Indonesia
Performance |
| Timeline |
| Adi Sarana Armada |
| Adaro Minerals Indonesia |
Adi Sarana and Adaro Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adi Sarana and Adaro Minerals
The main advantage of trading using opposite Adi Sarana and Adaro Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adi Sarana position performs unexpectedly, Adaro Minerals 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 Adaro Minerals will offset losses from the drop in Adaro Minerals' long position.| Adi Sarana vs. Surya Esa Perkasa | Adi Sarana vs. Tower Bersama Infrastructure | Adi Sarana vs. Erajaya Swasembada Tbk | Adi Sarana vs. Bekasi Fajar Industrial |
| Adaro Minerals vs. Bank Artos Indonesia | Adaro Minerals vs. GoTo Gojek Tokopedia | Adaro Minerals vs. Elang Mahkota Teknologi | Adaro Minerals vs. PT Bukalapak |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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