Correlation Between Aneka Tambang and Indiana Resources
Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Indiana Resources 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 Indiana Resources 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 Indiana Resources, you can compare the effects of market volatilities on Aneka Tambang and Indiana Resources 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 Indiana Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Indiana Resources.
Diversification Opportunities for Aneka Tambang and Indiana Resources
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aneka and Indiana is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Indiana Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indiana Resources 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 Indiana Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indiana Resources has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Indiana Resources go up and down completely randomly.
Pair Corralation between Aneka Tambang and Indiana Resources
Assuming the 90 days trading horizon Aneka Tambang is expected to generate 2.46 times less return on investment than Indiana Resources. But when comparing it to its historical volatility, Aneka Tambang Tbk is 2.57 times less risky than Indiana Resources. It trades about 0.2 of its potential returns per unit of risk. Indiana Resources is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 6.10 in Indiana Resources on December 27, 2024 and sell it today you would earn a total of 1.70 from holding Indiana Resources or generate 27.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.41% |
Values | Daily Returns |
Aneka Tambang Tbk vs. Indiana Resources
Performance |
Timeline |
Aneka Tambang Tbk |
Indiana Resources |
Aneka Tambang and Indiana Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aneka Tambang and Indiana Resources
The main advantage of trading using opposite Aneka Tambang and Indiana Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, Indiana Resources 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 Indiana Resources will offset losses from the drop in Indiana Resources' long position.Aneka Tambang vs. Sky Metals | Aneka Tambang vs. Australian Unity Office | Aneka Tambang vs. Catalyst Metals | Aneka Tambang vs. FireFly Metals |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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