Correlation Between Geo Energy and PT Adaro
Can any of the company-specific risk be diversified away by investing in both Geo Energy and PT Adaro 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 Geo Energy and PT Adaro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geo Energy Resources and PT Adaro Energy, you can compare the effects of market volatilities on Geo Energy and PT Adaro 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 Geo Energy with a short position of PT Adaro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geo Energy and PT Adaro.
Diversification Opportunities for Geo Energy and PT Adaro
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Geo and PADEF is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Geo Energy Resources and PT Adaro Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Adaro Energy and Geo Energy 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 Geo Energy Resources are associated (or correlated) with PT Adaro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Adaro Energy has no effect on the direction of Geo Energy i.e., Geo Energy and PT Adaro go up and down completely randomly.
Pair Corralation between Geo Energy and PT Adaro
Assuming the 90 days horizon Geo Energy Resources is expected to generate 0.65 times more return on investment than PT Adaro. However, Geo Energy Resources is 1.54 times less risky than PT Adaro. It trades about -0.22 of its potential returns per unit of risk. PT Adaro Energy is currently generating about -0.58 per unit of risk. If you would invest 21.00 in Geo Energy Resources on August 28, 2024 and sell it today you would lose (3.00) from holding Geo Energy Resources or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 14.29% |
| Values | Daily Returns |
Geo Energy Resources vs. PT Adaro Energy
Performance |
| Timeline |
| Geo Energy Resources |
| PT Adaro Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Geo Energy and PT Adaro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geo Energy and PT Adaro
The main advantage of trading using opposite Geo Energy and PT Adaro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geo Energy position performs unexpectedly, PT Adaro 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 PT Adaro will offset losses from the drop in PT Adaro's long position.| Geo Energy vs. Alliance Resource Partners | Geo Energy vs. Astera Labs, Common | Geo Energy vs. Autodesk | Geo Energy vs. Applied Blockchain |
| PT Adaro vs. Alliance Resource Partners | PT Adaro vs. Astera Labs, Common | PT Adaro vs. Autodesk | PT Adaro vs. Applied Blockchain |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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