Correlation Between Arita Prima and Anabatic Technologies

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

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

Diversification Opportunities for Arita Prima and Anabatic Technologies

-0.19

Correlation Coefficient

Arita Prima  Anabatic Technologies

Good diversification

The 3 months correlation between Arita and Anabatic is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Arita Prima Indonesia and Anabatic Technologies Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anabatic Technologies Tbk and Arita Prima 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 Arita Prima Indonesia are associated (or correlated) with Anabatic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anabatic Technologies Tbk has no effect on the direction of Arita Prima i.e., Arita Prima and Anabatic Technologies go up and down completely randomly.

Pair Corralation between Arita Prima and Anabatic Technologies

Assuming the 90 days trading horizon Arita Prima Indonesia is expected to under-perform the Anabatic Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Arita Prima Indonesia is 3.83 times less risky than Anabatic Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The Anabatic Technologies Tbk is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  37,400  in Anabatic Technologies Tbk on December 30, 2024 and sell it today you would earn a total of  8,600  from holding Anabatic Technologies Tbk or generate 22.99% return on investment over 90 days.

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

Arita Prima Indonesia  vs.  Anabatic Technologies Tbk

Arita Prima Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arita Prima Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Arita Prima is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Anabatic Technologies Tbk

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anabatic Technologies Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Anabatic Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arita Prima and Anabatic Technologies

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

The idea behind Arita Prima Indonesia and Anabatic Technologies 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 Global Correlations module to find global opportunities by holding instruments from different markets.