Correlation Between Aneka Tambang and CSL

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

Diversification Opportunities for Aneka Tambang and CSL

-0.87

Correlation Coefficient

Aneka Tambang  CSL

Pay attention - limited upside

The 3 months correlation between Aneka and CSL is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and CSL go up and down completely randomly.

Pair Corralation between Aneka Tambang and CSL

Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to generate 0.76 times more return on investment than CSL. However, Aneka Tambang Tbk is 1.31 times less risky than CSL. It trades about 0.2 of its potential returns per unit of risk. CSL is currently generating about -0.14 per unit of risk. If you would invest  90.00  in Aneka Tambang Tbk on December 29, 2024 and sell it today you would earn a total of  10.00  from holding Aneka Tambang Tbk or generate 11.11% return on investment over 90 days.

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

Aneka Tambang Tbk  vs.  CSL

Aneka Tambang Tbk

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aneka Tambang Tbk are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Aneka Tambang may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CSL

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Aneka Tambang and CSL

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

The idea behind Aneka Tambang Tbk and CSL 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.