Correlation Between Aneka Tambang and Cardno

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

Diversification Opportunities for Aneka Tambang and Cardno

0.64

Correlation Coefficient

Aneka Tambang  Cardno

Poor diversification

The 3 months correlation between Aneka and Cardno is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Cardno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardno 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 Cardno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardno has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Cardno go up and down completely randomly.

Pair Corralation between Aneka Tambang and Cardno

Assuming the 90 days trading horizon Aneka Tambang is expected to generate 5.77 times less return on investment than Cardno. But when comparing it to its historical volatility, Aneka Tambang Tbk is 4.5 times less risky than Cardno. It trades about 0.03 of its potential returns per unit of risk. Cardno is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Cardno on September 26, 2024 and sell it today you would earn a total of  2.00  from holding Cardno or generate 9.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aneka Tambang Tbk  vs.  Cardno

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.

Cardno

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Aneka Tambang Tbk and Cardno 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.