Correlation Between Exploitasi Energi and PT Temas

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

Diversification Opportunities for Exploitasi Energi and PT Temas

-0.41

Correlation Coefficient

Exploitasi Energi  PT Temas

Very good diversification

The 3 months correlation between Exploitasi and TMAS is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Exploitasi Energi Indonesia and PT Temas Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Temas Tbk 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 PT Temas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Temas Tbk has no effect on the direction of Exploitasi Energi i.e., Exploitasi Energi and PT Temas go up and down completely randomly.

Pair Corralation between Exploitasi Energi and PT Temas

Assuming the 90 days trading horizon Exploitasi Energi Indonesia is expected to generate 5.49 times more return on investment than PT Temas. However, Exploitasi Energi is 5.49 times more volatile than PT Temas Tbk. It trades about 0.38 of its potential returns per unit of risk. PT Temas Tbk is currently generating about 0.04 per unit of risk. If you would invest  1,800  in Exploitasi Energi Indonesia on October 23, 2024 and sell it today you would earn a total of  1,100  from holding Exploitasi Energi Indonesia or generate 61.11% return on investment over 90 days.

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

Exploitasi Energi Indonesia  vs.  PT Temas Tbk

Exploitasi Energi

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exploitasi Energi Indonesia are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Exploitasi Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Temas Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Temas Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Exploitasi Energi and PT Temas

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

The idea behind Exploitasi Energi Indonesia and PT Temas Tbk 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.