Correlation Between Aneka Tambang and Technology One

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

Diversification Opportunities for Aneka Tambang and Technology One

-0.05

Correlation Coefficient

Aneka Tambang  Technology One

Good diversification

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

Pair Corralation between Aneka Tambang and Technology One

Assuming the 90 days trading horizon Aneka Tambang is expected to generate 3.62 times less return on investment than Technology One. But when comparing it to its historical volatility, Aneka Tambang Tbk is 1.61 times less risky than Technology One. It trades about 0.1 of its potential returns per unit of risk. Technology One is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,588  in Technology One on October 9, 2024 and sell it today you would earn a total of  485.00  from holding Technology One or generate 18.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Aneka Tambang Tbk  vs.  Technology One

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.

Technology One

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technology One are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Technology One unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aneka Tambang and Technology One

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

The idea behind Aneka Tambang Tbk and Technology One 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 Global Correlations module to find global opportunities by holding instruments from different markets.