Correlation Between Avia Avian and RMK Energy
Can any of the company-specific risk be diversified away by investing in both Avia Avian and RMK Energy 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 RMK Energy 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 RMK Energy PT, you can compare the effects of market volatilities on Avia Avian and RMK Energy 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 RMK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avia Avian and RMK Energy.
Diversification Opportunities for Avia Avian and RMK Energy
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Avia and RMK is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Avia Avian PT and RMK Energy PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMK Energy PT 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 RMK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMK Energy PT has no effect on the direction of Avia Avian i.e., Avia Avian and RMK Energy go up and down completely randomly.
Pair Corralation between Avia Avian and RMK Energy
Assuming the 90 days trading horizon Avia Avian PT is expected to under-perform the RMK Energy. In addition to that, Avia Avian is 1.47 times more volatile than RMK Energy PT. It trades about -0.3 of its total potential returns per unit of risk. RMK Energy PT is currently generating about -0.24 per unit of volatility. If you would invest 55,000 in RMK Energy PT on September 2, 2024 and sell it today you would lose (4,000) from holding RMK Energy PT or give up 7.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avia Avian PT vs. RMK Energy PT
Performance |
| Timeline |
| Avia Avian PT |
| RMK Energy PT |
Avia Avian and RMK Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avia Avian and RMK Energy
The main advantage of trading using opposite Avia Avian and RMK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avia Avian position performs unexpectedly, RMK Energy 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 RMK Energy will offset losses from the drop in RMK Energy's long position.| Avia Avian vs. RMK Energy PT | Avia Avian vs. PT Hasnur Internasional | Avia Avian vs. Surya Biru Murni | Avia Avian vs. PAM Mineral Tbk |
| RMK Energy vs. Adaro Minerals Indonesia | RMK Energy vs. Prima Andalan Mandiri | RMK Energy vs. Sumber Global Energy | RMK Energy vs. Golden Eagle Energy |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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