Correlation Between Aneka Tambang and Boom Logistics

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

Diversification Opportunities for Aneka Tambang and Boom Logistics

0.15

Correlation Coefficient

Aneka Tambang  Boom Logistics

Average diversification

The 3 months correlation between Aneka and Boom is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Boom Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boom Logistics 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 Boom Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boom Logistics has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Boom Logistics go up and down completely randomly.

Pair Corralation between Aneka Tambang and Boom Logistics

Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the Boom Logistics. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Tambang Tbk is 2.61 times less risky than Boom Logistics. The stock trades about -0.01 of its potential returns per unit of risk. The Boom Logistics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  145.00  in Boom Logistics on October 10, 2024 and sell it today you would lose (5.00) from holding Boom Logistics or give up 3.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Aneka Tambang Tbk  vs.  Boom Logistics

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 comparatively stable primary indicators, Aneka Tambang is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Boom Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boom Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Boom Logistics 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 Boom Logistics

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

The idea behind Aneka Tambang Tbk and Boom Logistics 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.