Correlation Between RMK Energy and Avia Avian
Can any of the company-specific risk be diversified away by investing in both RMK Energy and Avia Avian 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 RMK Energy and Avia Avian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RMK Energy PT and Avia Avian PT, you can compare the effects of market volatilities on RMK Energy and Avia Avian 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 RMK Energy with a short position of Avia Avian. Check out your portfolio center. Please also check ongoing floating volatility patterns of RMK Energy and Avia Avian.
Diversification Opportunities for RMK Energy and Avia Avian
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RMK and Avia is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding RMK Energy PT and Avia Avian PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avia Avian PT and RMK Energy 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 RMK Energy PT are associated (or correlated) with Avia Avian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avia Avian PT has no effect on the direction of RMK Energy i.e., RMK Energy and Avia Avian go up and down completely randomly.
Pair Corralation between RMK Energy and Avia Avian
Assuming the 90 days trading horizon RMK Energy PT is expected to generate 1.36 times more return on investment than Avia Avian. However, RMK Energy is 1.36 times more volatile than Avia Avian PT. It trades about -0.03 of its potential returns per unit of risk. Avia Avian PT is currently generating about -0.28 per unit of risk. If you would invest 53,500 in RMK Energy PT on August 30, 2024 and sell it today you would lose (1,500) from holding RMK Energy PT or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RMK Energy PT vs. Avia Avian PT
Performance |
| Timeline |
| RMK Energy PT |
| Avia Avian PT |
RMK Energy and Avia Avian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RMK Energy and Avia Avian
The main advantage of trading using opposite RMK Energy and Avia Avian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RMK Energy position performs unexpectedly, Avia Avian 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 Avia Avian will offset losses from the drop in Avia Avian's long position.| RMK Energy vs. Adaro Minerals Indonesia | RMK Energy vs. Prima Andalan Mandiri | RMK Energy vs. Sumber Global Energy | RMK Energy vs. Golden Eagle Energy |
| Avia Avian vs. Dayamitra Telekomunikasi PT | Avia Avian vs. Cisarua Mountain Dairy | Avia Avian vs. PT Bukalapak | Avia Avian vs. Sumber Alfaria Trijaya |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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