Correlation Between Resource Alam and TBS Energi
Can any of the company-specific risk be diversified away by investing in both Resource Alam and TBS 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 Resource Alam and TBS Energi 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 TBS Energi Utama, you can compare the effects of market volatilities on Resource Alam and TBS 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 Resource Alam with a short position of TBS Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource Alam and TBS Energi.
Diversification Opportunities for Resource Alam and TBS Energi
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Resource and TBS is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Resource Alam Indonesia and TBS Energi Utama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBS Energi Utama 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 TBS Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBS Energi Utama has no effect on the direction of Resource Alam i.e., Resource Alam and TBS Energi go up and down completely randomly.
Pair Corralation between Resource Alam and TBS Energi
Assuming the 90 days trading horizon Resource Alam Indonesia is expected to generate 0.51 times more return on investment than TBS Energi. However, Resource Alam Indonesia is 1.96 times less risky than TBS Energi. It trades about -0.12 of its potential returns per unit of risk. TBS Energi Utama is currently generating about -0.19 per unit of risk. If you would invest 55,500 in Resource Alam Indonesia on August 30, 2024 and sell it today you would lose (3,500) from holding Resource Alam Indonesia or give up 6.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Resource Alam Indonesia vs. TBS Energi Utama
Performance |
| Timeline |
| Resource Alam Indonesia |
| TBS Energi Utama |
Resource Alam and TBS Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resource Alam and TBS Energi
The main advantage of trading using opposite Resource Alam and TBS Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resource Alam position performs unexpectedly, TBS 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 TBS Energi will offset losses from the drop in TBS Energi'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 |
| TBS Energi vs. Golden Eagle Energy | TBS Energi vs. Baramulti Suksessarana Tbk | TBS Energi vs. Samindo Resources Tbk | TBS Energi vs. Resource Alam Indonesia |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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