Correlation Between Aneka Tambang and Alderan Resources
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Alderan 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 Alderan Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aneka Tambang Tbk and Alderan Resources, you can compare the effects of market volatilities on Aneka Tambang and Alderan 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 Alderan Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Alderan Resources.
Diversification Opportunities for Aneka Tambang and Alderan Resources
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aneka and Alderan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Alderan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alderan Resources 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 Tbk are associated (or correlated) with Alderan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alderan Resources has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Alderan Resources go up and down completely randomly.
Pair Corralation between Aneka Tambang and Alderan Resources
Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to generate 0.21 times more return on investment than Alderan Resources. However, Aneka Tambang Tbk is 4.71 times less risky than Alderan Resources. It trades about 0.32 of its potential returns per unit of risk. Alderan Resources is currently generating about -0.21 per unit of risk. If you would invest 86.00 in Aneka Tambang Tbk on September 24, 2024 and sell it today you would earn a total of 8.00 from holding Aneka Tambang Tbk or generate 9.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Aneka Tambang Tbk vs. Alderan Resources
Performance |
Timeline |
Aneka Tambang Tbk |
Alderan Resources |
Aneka Tambang and Alderan Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aneka Tambang and Alderan Resources
The main advantage of trading using opposite Aneka Tambang and Alderan Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, Alderan 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 Alderan Resources will offset losses from the drop in Alderan Resources' long position.Aneka Tambang vs. Advanced Braking Technology | Aneka Tambang vs. Aussie Broadband | Aneka Tambang vs. WiseTech Global Limited | Aneka Tambang vs. Beston Global Food |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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