Correlation Between Avia Avian and Adaro Minerals
Can any of the company-specific risk be diversified away by investing in both Avia Avian 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 Avia Avian and Adaro Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avia Avian PT and Adaro Minerals Indonesia, you can compare the effects of market volatilities on Avia Avian 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 Avia Avian with a short position of Adaro Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avia Avian and Adaro Minerals.
Diversification Opportunities for Avia Avian and Adaro Minerals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avia and Adaro is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Avia Avian PT 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 Avia Avian 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 Avia Avian PT 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 Avia Avian i.e., Avia Avian and Adaro Minerals go up and down completely randomly.
Pair Corralation between Avia Avian and Adaro Minerals
Assuming the 90 days trading horizon Avia Avian PT is expected to generate 1.22 times more return on investment than Adaro Minerals. However, Avia Avian is 1.22 times more volatile than Adaro Minerals Indonesia. It trades about 0.24 of its potential returns per unit of risk. Adaro Minerals Indonesia is currently generating about -0.27 per unit of risk. If you would invest 37,400 in Avia Avian PT on October 24, 2024 and sell it today you would earn a total of 4,600 from holding Avia Avian PT or generate 12.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avia Avian PT vs. Adaro Minerals Indonesia
Performance |
| Timeline |
| Avia Avian PT |
| Adaro Minerals Indonesia |
Avia Avian and Adaro Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avia Avian and Adaro Minerals
The main advantage of trading using opposite Avia Avian and Adaro Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avia Avian 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.| Avia Avian vs. Dayamitra Telekomunikasi PT | Avia Avian vs. Cisarua Mountain Dairy | Avia Avian vs. PT Bukalapak | Avia Avian vs. Sumber Alfaria Trijaya |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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