Correlation Between Aneka Tambang and APA

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

Diversification Opportunities for Aneka Tambang and APA

0.77

Correlation Coefficient

Aneka Tambang  APA

Poor diversification

The 3 months correlation between Aneka and APA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and APA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Group 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 APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Group has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and APA go up and down completely randomly.

Pair Corralation between Aneka Tambang and APA

Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the APA. In addition to that, Aneka Tambang is 1.76 times more volatile than APA Group. It trades about -0.05 of its total potential returns per unit of risk. APA Group is currently generating about -0.02 per unit of volatility. If you would invest  752.00  in APA Group on September 13, 2024 and sell it today you would lose (16.00) from holding APA Group or give up 2.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Aneka Tambang Tbk  vs.  APA Group

Aneka Tambang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aneka Tambang Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

APA Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APA Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, APA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aneka Tambang and APA

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

The idea behind Aneka Tambang Tbk and APA Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.