Correlation Between Link Net and RMK Energy
Can any of the company-specific risk be diversified away by investing in both Link Net and RMK 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 Link Net and RMK Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Link Net Tbk and RMK Energy PT, you can compare the effects of market volatilities on Link Net and RMK 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 Link Net with a short position of RMK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Net and RMK Energy.
Diversification Opportunities for Link Net and RMK Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Link and RMK is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Link Net Tbk and RMK Energy PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMK Energy PT and Link Net 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 Link Net Tbk are associated (or correlated) with RMK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMK Energy PT has no effect on the direction of Link Net i.e., Link Net and RMK Energy go up and down completely randomly.
Pair Corralation between Link Net and RMK Energy
Assuming the 90 days trading horizon Link Net Tbk is expected to under-perform the RMK Energy. In addition to that, Link Net is 1.32 times more volatile than RMK Energy PT. It trades about -0.04 of its total potential returns per unit of risk. RMK Energy PT is currently generating about -0.04 per unit of volatility. If you would invest 91,530 in RMK Energy PT on August 26, 2024 and sell it today you would lose (40,530) from holding RMK Energy PT or give up 44.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Link Net Tbk vs. RMK Energy PT
Performance |
| Timeline |
| Link Net Tbk |
| RMK Energy PT |
Link Net and RMK Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Link Net and RMK Energy
The main advantage of trading using opposite Link Net and RMK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Net position performs unexpectedly, RMK 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 RMK Energy will offset losses from the drop in RMK Energy's long position.| Link Net vs. Mnc Land Tbk | Link Net vs. MNC Vision Networks | Link Net vs. MD Pictures Tbk | Link Net vs. Medikaloka Hermina PT |
| RMK Energy vs. Adaro Minerals Indonesia | RMK Energy vs. Prima Andalan Mandiri | RMK Energy vs. Sumber Global Energy | RMK Energy vs. Golden Eagle Energy |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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