Correlation Between Exploitasi Energi and Resource Alam

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

Diversification Opportunities for Exploitasi Energi and Resource Alam

-0.54

Correlation Coefficient

Exploitasi Energi  Resource Alam

Excellent diversification

The 3 months correlation between Exploitasi and Resource is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Exploitasi Energi Indonesia and Resource Alam Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Alam Indonesia 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 Resource Alam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Alam Indonesia has no effect on the direction of Exploitasi Energi i.e., Exploitasi Energi and Resource Alam go up and down completely randomly.

Pair Corralation between Exploitasi Energi and Resource Alam

Assuming the 90 days trading horizon Exploitasi Energi Indonesia is expected to generate 3.96 times more return on investment than Resource Alam. However, Exploitasi Energi is 3.96 times more volatile than Resource Alam Indonesia. It trades about 0.48 of its potential returns per unit of risk. Resource Alam Indonesia is currently generating about -0.06 per unit of risk. If you would invest  1,800  in Exploitasi Energi Indonesia on October 22, 2024 and sell it today you would earn a total of  1,400  from holding Exploitasi Energi Indonesia or generate 77.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Exploitasi Energi Indonesia  vs.  Resource Alam Indonesia

Exploitasi Energi

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Exploitasi Energi Indonesia are ranked lower than 29 (%) 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.

Resource Alam Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Resource Alam Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Exploitasi Energi and Resource Alam

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

The idea behind Exploitasi Energi Indonesia and Resource Alam 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.