Correlation Between Adaro Minerals and GTS Internasional

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

By analyzing existing cross correlation between Adaro Minerals Indonesia and GTS Internasional Tbk, you can compare the effects of market volatilities on Adaro Minerals and GTS Internasional 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 Adaro Minerals with a short position of GTS Internasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Minerals and GTS Internasional.

Diversification Opportunities for Adaro Minerals and GTS Internasional

-0.34

Correlation Coefficient

Adaro Minerals  GTS Internasional

Very good diversification

The 3 months correlation between Adaro and GTS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Minerals Indonesia and GTS Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTS Internasional Tbk and Adaro Minerals 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 Adaro Minerals Indonesia are associated (or correlated) with GTS Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTS Internasional Tbk has no effect on the direction of Adaro Minerals i.e., Adaro Minerals and GTS Internasional go up and down completely randomly.

Pair Corralation between Adaro Minerals and GTS Internasional

Assuming the 90 days trading horizon Adaro Minerals Indonesia is expected to under-perform the GTS Internasional. But the stock apears to be less risky and, when comparing its historical volatility, Adaro Minerals Indonesia is 1.81 times less risky than GTS Internasional. The stock trades about -0.54 of its potential returns per unit of risk. The GTS Internasional Tbk is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  3,200  in GTS Internasional Tbk on October 12, 2024 and sell it today you would earn a total of  1,200  from holding GTS Internasional Tbk or generate 37.5% return on investment over 90 days.

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

Adaro Minerals Indonesia  vs.  GTS Internasional Tbk

Adaro Minerals Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adaro Minerals Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

GTS Internasional Tbk

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GTS Internasional Tbk are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, GTS Internasional disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adaro Minerals and GTS Internasional

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

The idea behind Adaro Minerals Indonesia and GTS Internasional Tbk 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.