Correlation Between Aneka Tambang and Pact Group

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

Diversification Opportunities for Aneka Tambang and Pact Group

0.61

Correlation Coefficient

Aneka Tambang  Pact Group

Poor diversification

The 3 months correlation between Aneka and Pact is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Pact Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pact Group Holdings 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 Pact Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pact Group Holdings has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Pact Group go up and down completely randomly.

Pair Corralation between Aneka Tambang and Pact Group

Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the Pact Group. In addition to that, Aneka Tambang is 1.53 times more volatile than Pact Group Holdings. It trades about -0.05 of its total potential returns per unit of risk. Pact Group Holdings is currently generating about 0.0 per unit of volatility. If you would invest  83.00  in Pact Group Holdings on September 13, 2024 and sell it today you would lose (1.00) from holding Pact Group Holdings or give up 1.2% of portfolio value over 90 days.

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

Aneka Tambang Tbk  vs.  Pact Group Holdings

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.

Pact Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Aneka Tambang Tbk and Pact Group Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.