Correlation Between INDO RAMA and Glencore Plc

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

By analyzing existing cross correlation between INDO RAMA SYNTHETIC and Glencore plc, you can compare the effects of market volatilities on INDO RAMA and Glencore Plc 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 INDO RAMA with a short position of Glencore Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDO RAMA and Glencore Plc.

Diversification Opportunities for INDO RAMA and Glencore Plc

0.0

Correlation Coefficient

INDO RAMA  Glencore Plc

Pay attention - limited upside

The 3 months correlation between INDO and Glencore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding INDO RAMA SYNTHETIC and Glencore plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore plc and INDO RAMA 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 INDO RAMA SYNTHETIC are associated (or correlated) with Glencore Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore plc has no effect on the direction of INDO RAMA i.e., INDO RAMA and Glencore Plc go up and down completely randomly.

Pair Corralation between INDO RAMA and Glencore Plc

Assuming the 90 days trading horizon INDO RAMA SYNTHETIC is expected to generate 0.84 times more return on investment than Glencore Plc. However, INDO RAMA SYNTHETIC is 1.18 times less risky than Glencore Plc. It trades about 0.04 of its potential returns per unit of risk. Glencore plc is currently generating about -0.02 per unit of risk. If you would invest  18.00  in INDO RAMA SYNTHETIC on October 7, 2024 and sell it today you would earn a total of  3.00  from holding INDO RAMA SYNTHETIC or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

INDO RAMA SYNTHETIC  vs.  Glencore plc

INDO RAMA SYNTHETIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDO RAMA SYNTHETIC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, INDO RAMA is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Glencore plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with INDO RAMA and Glencore Plc

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

The idea behind INDO RAMA SYNTHETIC and Glencore plc 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.

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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.