Correlation Between PT Indo and Tesla

Can any of the company-specific risk be diversified away by investing in both PT Indo and Tesla 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 PT Indo and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Indo Tambangraya and Tesla Inc, you can compare the effects of market volatilities on PT Indo and Tesla 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 PT Indo with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indo and Tesla.

Diversification Opportunities for PT Indo and Tesla

0.55

Correlation Coefficient

PT Indo  Tesla

Very weak diversification

The 3 months correlation between 3IB and Tesla is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PT Indo Tambangraya and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and PT Indo 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 PT Indo Tambangraya are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of PT Indo i.e., PT Indo and Tesla go up and down completely randomly.

Pair Corralation between PT Indo and Tesla

Assuming the 90 days trading horizon PT Indo is expected to generate 58.46 times less return on investment than Tesla. In addition to that, PT Indo is 1.18 times more volatile than Tesla Inc. It trades about 0.0 of its total potential returns per unit of risk. Tesla Inc is currently generating about 0.09 per unit of volatility. If you would invest  11,004  in Tesla Inc on October 4, 2024 and sell it today you would earn a total of  29,526  from holding Tesla Inc or generate 268.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

PT Indo Tambangraya  vs.  Tesla Inc

PT Indo Tambangraya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indo Tambangraya has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PT Indo is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Tesla Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Tesla unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indo and Tesla

The main advantage of trading using opposite PT Indo and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indo position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.

The idea behind PT Indo Tambangraya and Tesla Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.