Correlation Between Aneka Tambang and Brambles

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

Diversification Opportunities for Aneka Tambang and Brambles

-0.12

Correlation Coefficient

Aneka Tambang  Brambles

Good diversification

The 3 months correlation between Aneka and Brambles is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Brambles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brambles 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 Brambles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brambles has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Brambles go up and down completely randomly.

Pair Corralation between Aneka Tambang and Brambles

Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the Brambles. In addition to that, Aneka Tambang is 1.74 times more volatile than Brambles. It trades about 0.0 of its total potential returns per unit of risk. Brambles is currently generating about 0.05 per unit of volatility. If you would invest  1,857  in Brambles on October 23, 2024 and sell it today you would earn a total of  52.00  from holding Brambles or generate 2.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Aneka Tambang Tbk  vs.  Brambles

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.

Brambles

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brambles are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Brambles 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 Brambles

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

The idea behind Aneka Tambang Tbk and Brambles 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.