Correlation Between Indo Tambangraya and Indika Energy
Can any of the company-specific risk be diversified away by investing in both Indo Tambangraya and Indika 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 Indo Tambangraya and Indika Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indo Tambangraya Megah and Indika Energy Tbk, you can compare the effects of market volatilities on Indo Tambangraya and Indika 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 Indo Tambangraya with a short position of Indika Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Tambangraya and Indika Energy.
Diversification Opportunities for Indo Tambangraya and Indika Energy
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indo and Indika is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Indo Tambangraya Megah and Indika Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indika Energy Tbk and Indo Tambangraya 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 Indo Tambangraya Megah are associated (or correlated) with Indika Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indika Energy Tbk has no effect on the direction of Indo Tambangraya i.e., Indo Tambangraya and Indika Energy go up and down completely randomly.
Pair Corralation between Indo Tambangraya and Indika Energy
Assuming the 90 days trading horizon Indo Tambangraya Megah is expected to generate 0.48 times more return on investment than Indika Energy. However, Indo Tambangraya Megah is 2.08 times less risky than Indika Energy. It trades about 0.09 of its potential returns per unit of risk. Indika Energy Tbk is currently generating about 0.02 per unit of risk. If you would invest 2,408,721 in Indo Tambangraya Megah on August 31, 2024 and sell it today you would earn a total of 321,279 from holding Indo Tambangraya Megah or generate 13.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indo Tambangraya Megah vs. Indika Energy Tbk
Performance |
| Timeline |
| Indo Tambangraya Megah |
| Indika Energy Tbk |
Indo Tambangraya and Indika Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indo Tambangraya and Indika Energy
The main advantage of trading using opposite Indo Tambangraya and Indika Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Tambangraya position performs unexpectedly, Indika 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 Indika Energy will offset losses from the drop in Indika Energy's long position.| Indo Tambangraya vs. Bukit Asam Tbk | Indo Tambangraya vs. Adaro Energy Tbk | Indo Tambangraya vs. United Tractors Tbk | Indo Tambangraya vs. Vale Indonesia Tbk |
| Indika Energy vs. Indo Tambangraya Megah | Indika Energy vs. Adaro Energy Tbk | Indika Energy vs. Medco Energi Internasional | Indika Energy vs. Vale Indonesia Tbk |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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