Correlation Between Aneka Tambang and EP Financial

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

Diversification Opportunities for Aneka Tambang and EP Financial

0.04

Correlation Coefficient

Aneka Tambang  EP Financial

Significant diversification

The 3 months correlation between Aneka and EP1 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group 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 EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and EP Financial go up and down completely randomly.

Pair Corralation between Aneka Tambang and EP Financial

Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to generate 0.5 times more return on investment than EP Financial. However, Aneka Tambang Tbk is 2.0 times less risky than EP Financial. It trades about 0.31 of its potential returns per unit of risk. EP Financial Group is currently generating about 0.05 per unit of risk. If you would invest  86.00  in Aneka Tambang Tbk on September 26, 2024 and sell it today you would earn a total of  8.00  from holding Aneka Tambang Tbk or generate 9.3% return on investment over 90 days.

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

Aneka Tambang Tbk  vs.  EP Financial Group

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.

EP Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

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

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

The idea behind Aneka Tambang Tbk and EP Financial Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.