Correlation Between Aneka Tambang and Bukit Asam

Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Bukit Asam 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 Bukit Asam 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 Bukit Asam Tbk, you can compare the effects of market volatilities on Aneka Tambang and Bukit Asam 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 Bukit Asam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Bukit Asam.

Diversification Opportunities for Aneka Tambang and Bukit Asam

-0.45

Correlation Coefficient

Aneka Tambang  Bukit Asam

Very good diversification

The 3 months correlation between Aneka and Bukit is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Persero and Bukit Asam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Asam 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 Bukit Asam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Asam Tbk has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Bukit Asam go up and down completely randomly.

Pair Corralation between Aneka Tambang and Bukit Asam

Assuming the 90 days trading horizon Aneka Tambang Persero is expected to generate 1.72 times more return on investment than Bukit Asam. However, Aneka Tambang is 1.72 times more volatile than Bukit Asam Tbk. It trades about 0.06 of its potential returns per unit of risk. Bukit Asam Tbk is currently generating about -0.09 per unit of risk. If you would invest  152,500  in Aneka Tambang Persero on December 30, 2024 and sell it today you would earn a total of  11,000  from holding Aneka Tambang Persero or generate 7.21% 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.  Bukit Asam Tbk

Aneka Tambang Persero

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aneka Tambang Persero are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Aneka Tambang may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bukit Asam Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bukit Asam Tbk 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.

Pair Trading with Aneka Tambang and Bukit Asam

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

The idea behind Aneka Tambang Persero and Bukit Asam 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.