Correlation Between Aneka Tambang and Gold Road
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Gold Road 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 Aneka Tambang and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aneka Tambang Tbk and Gold Road Resources, you can compare the effects of market volatilities on Aneka Tambang and Gold Road 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 Aneka Tambang with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Gold Road.
Diversification Opportunities for Aneka Tambang and Gold Road
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aneka and Gold is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and Aneka Tambang 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 Aneka Tambang Tbk are associated (or correlated) with Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Gold Road go up and down completely randomly.
Pair Corralation between Aneka Tambang and Gold Road
Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the Gold Road. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Tambang Tbk is 1.08 times less risky than Gold Road. The stock trades about -0.1 of its potential returns per unit of risk. The Gold Road Resources is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Gold Road Resources on August 29, 2024 and sell it today you would lose (5.00) from holding Gold Road Resources or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aneka Tambang Tbk vs. Gold Road Resources
Performance |
| Timeline |
| Aneka Tambang Tbk |
| Gold Road Resources |
Aneka Tambang and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aneka Tambang and Gold Road
The main advantage of trading using opposite Aneka Tambang and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Aneka Tambang vs. Hawsons Iron | Aneka Tambang vs. Carlton Investments | Aneka Tambang vs. MFF Capital Investments | Aneka Tambang vs. Mount Gibson Iron |
| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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