Correlation Between Rio Tinto and Aneka Tambang
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Aneka Tambang 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 Rio Tinto and Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto and Aneka Tambang Tbk, you can compare the effects of market volatilities on Rio Tinto and Aneka Tambang 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 Rio Tinto with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Aneka Tambang.
Diversification Opportunities for Rio Tinto and Aneka Tambang
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rio and Aneka is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto and Aneka Tambang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Tbk and Rio Tinto 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 Rio Tinto are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Tbk has no effect on the direction of Rio Tinto i.e., Rio Tinto and Aneka Tambang go up and down completely randomly.
Pair Corralation between Rio Tinto and Aneka Tambang
Assuming the 90 days trading horizon Rio Tinto is expected to generate 1.04 times more return on investment than Aneka Tambang. However, Rio Tinto is 1.04 times more volatile than Aneka Tambang Tbk. It trades about 0.02 of its potential returns per unit of risk. Aneka Tambang Tbk is currently generating about 0.01 per unit of risk. If you would invest 10,755 in Rio Tinto on August 28, 2024 and sell it today you would earn a total of 916.00 from holding Rio Tinto or generate 8.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Rio Tinto vs. Aneka Tambang Tbk
Performance |
| Timeline |
| Rio Tinto |
| Aneka Tambang Tbk |
Rio Tinto and Aneka Tambang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Aneka Tambang
The main advantage of trading using opposite Rio Tinto and Aneka Tambang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Aneka Tambang 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 Aneka Tambang will offset losses from the drop in Aneka Tambang's long position.| Rio Tinto vs. Perpetual Credit Income | Rio Tinto vs. Finexia Financial Group | Rio Tinto vs. Prime Financial Group | Rio Tinto vs. Ironbark Capital |
| Aneka Tambang vs. Hawsons Iron | Aneka Tambang vs. Carlton Investments | Aneka Tambang vs. MFF Capital Investments | Aneka Tambang vs. Mount Gibson Iron |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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