Correlation Between Aneka Tambang and Samindo Resources

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

By analyzing existing cross correlation between Aneka Tambang Persero and Samindo Resources Tbk, you can compare the effects of market volatilities on Aneka Tambang and Samindo Resources 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 Aneka Tambang with a short position of Samindo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Samindo Resources.

Diversification Opportunities for Aneka Tambang and Samindo Resources

-0.5

Correlation Coefficient

Aneka Tambang  Samindo Resources

Very good diversification

The 3 months correlation between Aneka and Samindo is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Persero and Samindo Resources Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samindo Resources Tbk and Aneka Tambang 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 Aneka Tambang Persero are associated (or correlated) with Samindo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samindo Resources Tbk has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Samindo Resources go up and down completely randomly.

Pair Corralation between Aneka Tambang and Samindo Resources

Assuming the 90 days trading horizon Aneka Tambang Persero is expected to under-perform the Samindo Resources. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Tambang Persero is 1.04 times less risky than Samindo Resources. The stock trades about -0.04 of its potential returns per unit of risk. The Samindo Resources Tbk is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  132,000  in Samindo Resources Tbk on October 15, 2024 and sell it today you would earn a total of  30,000  from holding Samindo Resources Tbk or generate 22.73% return on investment over 90 days.

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

Aneka Tambang Persero  vs.  Samindo Resources Tbk

Aneka Tambang Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aneka Tambang Persero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Samindo Resources Tbk

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Aneka Tambang and Samindo Resources

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

The idea behind Aneka Tambang Persero and Samindo Resources 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.