Correlation Between Timah Persero and Indika Energy
Can any of the company-specific risk be diversified away by investing in both Timah Persero and Indika 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 Indika 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 Indika Energy Tbk, you can compare the effects of market volatilities on Timah Persero and Indika 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 Indika Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timah Persero and Indika Energy.
Diversification Opportunities for Timah Persero and Indika Energy
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Timah and Indika is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Timah Persero Tbk and Indika Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indika 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 Indika Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indika Energy Tbk has no effect on the direction of Timah Persero i.e., Timah Persero and Indika Energy go up and down completely randomly.
Pair Corralation between Timah Persero and Indika Energy
Assuming the 90 days trading horizon Timah Persero Tbk is expected to generate 1.52 times more return on investment than Indika Energy. However, Timah Persero is 1.52 times more volatile than Indika Energy Tbk. It trades about 0.08 of its potential returns per unit of risk. Indika Energy Tbk is currently generating about 0.02 per unit of risk. If you would invest 65,500 in Timah Persero Tbk on September 2, 2024 and sell it today you would earn a total of 46,500 from holding Timah Persero Tbk or generate 70.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timah Persero Tbk vs. Indika Energy Tbk
Performance |
| Timeline |
| Timah Persero Tbk |
| Indika Energy Tbk |
Timah Persero and Indika Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timah Persero and Indika Energy
The main advantage of trading using opposite Timah Persero and Indika Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timah Persero position performs unexpectedly, Indika 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 Indika Energy will offset losses from the drop in Indika Energy's long position.| Timah Persero vs. Perusahaan Gas Negara | Timah Persero vs. Telkom Indonesia Tbk | Timah Persero vs. Mitra Pinasthika Mustika | Timah Persero vs. Jakarta Int Hotels |
| Indika Energy vs. Indo Tambangraya Megah | Indika Energy vs. Adaro Energy Tbk | Indika Energy vs. Medco Energi Internasional | Indika Energy vs. Vale Indonesia Tbk |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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