Correlation Between Timah Persero and Adaro Energy
Can any of the company-specific risk be diversified away by investing in both Timah Persero and Adaro 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 Timah Persero and Adaro Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timah Persero Tbk and Adaro Energy Tbk, you can compare the effects of market volatilities on Timah Persero and Adaro 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 Timah Persero with a short position of Adaro Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timah Persero and Adaro Energy.
Diversification Opportunities for Timah Persero and Adaro Energy
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Timah and Adaro is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Timah Persero Tbk and Adaro Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Energy Tbk and Timah Persero 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 Timah Persero Tbk are associated (or correlated) with Adaro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Energy Tbk has no effect on the direction of Timah Persero i.e., Timah Persero and Adaro Energy go up and down completely randomly.
Pair Corralation between Timah Persero and Adaro Energy
Assuming the 90 days trading horizon Timah Persero Tbk is expected to generate 1.31 times more return on investment than Adaro Energy. However, Timah Persero is 1.31 times more volatile than Adaro Energy Tbk. It trades about -0.02 of its potential returns per unit of risk. Adaro Energy Tbk is currently generating about -0.22 per unit of risk. If you would invest 101,500 in Timah Persero Tbk on November 29, 2024 and sell it today you would lose (1,500) from holding Timah Persero Tbk or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timah Persero Tbk vs. Adaro Energy Tbk
Performance |
| Timeline |
| Timah Persero Tbk |
| Adaro Energy Tbk |
Timah Persero and Adaro Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timah Persero and Adaro Energy
The main advantage of trading using opposite Timah Persero and Adaro Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timah Persero position performs unexpectedly, Adaro 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 Adaro Energy will offset losses from the drop in Adaro Energy's long position.| Timah Persero vs. Vale Indonesia Tbk | Timah Persero vs. Aneka Tambang Persero | Timah Persero vs. Bukit Asam Tbk | Timah Persero vs. Perusahaan Gas Negara |
| Adaro Energy vs. Bukit Asam Tbk | Adaro Energy vs. Aneka Tambang Persero | Adaro Energy vs. Perusahaan Gas Negara | Adaro Energy vs. Indo Tambangraya Megah |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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