Correlation Between Exploitasi Energi and Champion Pacific

Can any of the company-specific risk be diversified away by investing in both Exploitasi Energi and Champion Pacific 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 Exploitasi Energi and Champion Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exploitasi Energi Indonesia and Champion Pacific Indonesia, you can compare the effects of market volatilities on Exploitasi Energi and Champion Pacific 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 Exploitasi Energi with a short position of Champion Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exploitasi Energi and Champion Pacific.

Diversification Opportunities for Exploitasi Energi and Champion Pacific

0.18

Correlation Coefficient

Exploitasi Energi  Champion Pacific

Average diversification

The 3 months correlation between Exploitasi and Champion is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Exploitasi Energi Indonesia and Champion Pacific Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Pacific Ind and Exploitasi Energi 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 Exploitasi Energi Indonesia are associated (or correlated) with Champion Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Pacific Ind has no effect on the direction of Exploitasi Energi i.e., Exploitasi Energi and Champion Pacific go up and down completely randomly.

Pair Corralation between Exploitasi Energi and Champion Pacific

Assuming the 90 days trading horizon Exploitasi Energi Indonesia is expected to generate 5.82 times more return on investment than Champion Pacific. However, Exploitasi Energi is 5.82 times more volatile than Champion Pacific Indonesia. It trades about 0.17 of its potential returns per unit of risk. Champion Pacific Indonesia is currently generating about 0.05 per unit of risk. If you would invest  700.00  in Exploitasi Energi Indonesia on September 14, 2024 and sell it today you would earn a total of  700.00  from holding Exploitasi Energi Indonesia or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Exploitasi Energi Indonesia  vs.  Champion Pacific Indonesia

Exploitasi Energi

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exploitasi Energi Indonesia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Exploitasi Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Champion Pacific Ind

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Champion Pacific Indonesia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Champion Pacific is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Exploitasi Energi and Champion Pacific

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

The idea behind Exploitasi Energi Indonesia and Champion Pacific Indonesia 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.