Correlation Between Indo Tambangraya and Medco Energi
Can any of the company-specific risk be diversified away by investing in both Indo Tambangraya and Medco Energi 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 Medco Energi 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 Medco Energi Internasional, you can compare the effects of market volatilities on Indo Tambangraya and Medco Energi 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 Medco Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Tambangraya and Medco Energi.
Diversification Opportunities for Indo Tambangraya and Medco Energi
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indo and Medco is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Indo Tambangraya Megah and Medco Energi Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medco Energi Interna 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 Medco Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medco Energi Interna has no effect on the direction of Indo Tambangraya i.e., Indo Tambangraya and Medco Energi go up and down completely randomly.
Pair Corralation between Indo Tambangraya and Medco Energi
Assuming the 90 days trading horizon Indo Tambangraya is expected to generate 3.65 times less return on investment than Medco Energi. But when comparing it to its historical volatility, Indo Tambangraya Megah is 1.71 times less risky than Medco Energi. It trades about 0.01 of its potential returns per unit of risk. Medco Energi Internasional is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 99,902 in Medco Energi Internasional on August 30, 2024 and sell it today you would earn a total of 12,598 from holding Medco Energi Internasional or generate 12.61% 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. Medco Energi Internasional
Performance |
| Timeline |
| Indo Tambangraya Megah |
| Medco Energi Interna |
Indo Tambangraya and Medco Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indo Tambangraya and Medco Energi
The main advantage of trading using opposite Indo Tambangraya and Medco Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Tambangraya position performs unexpectedly, Medco Energi 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 Medco Energi will offset losses from the drop in Medco Energi'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 |
| Medco Energi vs. Vale Indonesia Tbk | Medco Energi vs. Timah Persero Tbk | Medco Energi vs. Perusahaan Gas Negara | Medco Energi vs. Bukit Asam 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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