Correlation Between Aneka Tambang and Capitol Health

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

Diversification Opportunities for Aneka Tambang and Capitol Health

-0.5

Correlation Coefficient

Aneka Tambang  Capitol Health

Very good diversification

The 3 months correlation between Aneka and Capitol is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Capitol Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Health 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 Capitol Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Health has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Capitol Health go up and down completely randomly.

Pair Corralation between Aneka Tambang and Capitol Health

Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to generate 0.75 times more return on investment than Capitol Health. However, Aneka Tambang Tbk is 1.33 times less risky than Capitol Health. It trades about 0.06 of its potential returns per unit of risk. Capitol Health is currently generating about 0.04 per unit of risk. If you would invest  90.00  in Aneka Tambang Tbk on September 23, 2024 and sell it today you would earn a total of  4.00  from holding Aneka Tambang Tbk or generate 4.44% return on investment over 90 days.

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

Aneka Tambang Tbk  vs.  Capitol Health

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.

Capitol Health

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, Capitol Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aneka Tambang and Capitol Health

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

The idea behind Aneka Tambang Tbk and Capitol Health 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.