Correlation Between Aneka Tambang and Everest Metals

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

Diversification Opportunities for Aneka Tambang and Everest Metals

0.7

Correlation Coefficient

Aneka Tambang  Everest Metals

Poor diversification

The 3 months correlation between Aneka and Everest is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Everest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest Metals 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 Everest Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Metals has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Everest Metals go up and down completely randomly.

Pair Corralation between Aneka Tambang and Everest Metals

Assuming the 90 days trading horizon Aneka Tambang is expected to generate 4.12 times less return on investment than Everest Metals. But when comparing it to its historical volatility, Aneka Tambang Tbk is 4.32 times less risky than Everest Metals. It trades about 0.1 of its potential returns per unit of risk. Everest Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Everest Metals on December 22, 2024 and sell it today you would earn a total of  3.00  from holding Everest Metals or generate 23.08% 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.  Everest Metals

Aneka Tambang Tbk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aneka Tambang Tbk are ranked lower than 8 (%) 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.

Everest Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Everest Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Everest Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aneka Tambang and Everest Metals

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

The idea behind Aneka Tambang Tbk and Everest Metals 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.