Correlation Between Resource Alam and Samudera Indonesia
Can any of the company-specific risk be diversified away by investing in both Resource Alam and Samudera Indonesia 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 Resource Alam and Samudera Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resource Alam Indonesia and Samudera Indonesia Tbk, you can compare the effects of market volatilities on Resource Alam and Samudera Indonesia 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 Resource Alam with a short position of Samudera Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource Alam and Samudera Indonesia.
Diversification Opportunities for Resource Alam and Samudera Indonesia
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Resource and Samudera is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Resource Alam Indonesia and Samudera Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samudera Indonesia Tbk and Resource Alam 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 Resource Alam Indonesia are associated (or correlated) with Samudera Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samudera Indonesia Tbk has no effect on the direction of Resource Alam i.e., Resource Alam and Samudera Indonesia go up and down completely randomly.
Pair Corralation between Resource Alam and Samudera Indonesia
Assuming the 90 days trading horizon Resource Alam Indonesia is expected to generate 1.29 times more return on investment than Samudera Indonesia. However, Resource Alam is 1.29 times more volatile than Samudera Indonesia Tbk. It trades about -0.21 of its potential returns per unit of risk. Samudera Indonesia Tbk is currently generating about -0.5 per unit of risk. If you would invest 56,500 in Resource Alam Indonesia on September 1, 2024 and sell it today you would lose (5,500) from holding Resource Alam Indonesia or give up 9.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resource Alam Indonesia vs. Samudera Indonesia Tbk
Performance |
| Timeline |
| Resource Alam Indonesia |
| Samudera Indonesia Tbk |
Resource Alam and Samudera Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resource Alam and Samudera Indonesia
The main advantage of trading using opposite Resource Alam and Samudera Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resource Alam position performs unexpectedly, Samudera Indonesia 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 Samudera Indonesia will offset losses from the drop in Samudera Indonesia's long position.| Resource Alam vs. Petrosea Tbk | Resource Alam vs. Harum Energy Tbk | Resource Alam vs. Perdana Karya Perkasa | Resource Alam vs. Bayan Resources Tbk |
| Samudera Indonesia vs. PT Temas Tbk | Samudera Indonesia vs. Petrosea Tbk | Samudera Indonesia vs. Rig Tenders Tbk | Samudera Indonesia vs. Rukun Raharja 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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