Correlation Between Aneka Tambang and Tigers Realm

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

Diversification Opportunities for Aneka Tambang and Tigers Realm

-0.05

Correlation Coefficient

Aneka Tambang  Tigers Realm

Good diversification

The 3 months correlation between Aneka and Tigers is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Tigers Realm Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigers Realm Coal 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 Tigers Realm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigers Realm Coal has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Tigers Realm go up and down completely randomly.

Pair Corralation between Aneka Tambang and Tigers Realm

Assuming the 90 days trading horizon Aneka Tambang is expected to generate 2.68 times less return on investment than Tigers Realm. But when comparing it to its historical volatility, Aneka Tambang Tbk is 5.8 times less risky than Tigers Realm. It trades about 0.08 of its potential returns per unit of risk. Tigers Realm Coal is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Tigers Realm Coal on October 17, 2024 and sell it today you would earn a total of  0.00  from holding Tigers Realm Coal or generate 0.0% return on investment over 90 days.

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

Aneka Tambang Tbk  vs.  Tigers Realm Coal

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 comparatively stable primary indicators, Aneka Tambang is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Tigers Realm Coal

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tigers Realm Coal are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Tigers Realm may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aneka Tambang and Tigers Realm

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

The idea behind Aneka Tambang Tbk and Tigers Realm Coal 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.