Correlation Between AECOM TECHNOLOGY and TAMBANG BATUBARA

Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY and TAMBANG BATUBARA 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 AECOM TECHNOLOGY and TAMBANG BATUBARA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AECOM TECHNOLOGY and TAMBANG BATUBARA B , you can compare the effects of market volatilities on AECOM TECHNOLOGY and TAMBANG BATUBARA 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 AECOM TECHNOLOGY with a short position of TAMBANG BATUBARA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and TAMBANG BATUBARA.

Diversification Opportunities for AECOM TECHNOLOGY and TAMBANG BATUBARA

0.6

Correlation Coefficient

AECOM TECHNOLOGY  TAMBANG BATUBARA

Poor diversification

The 3 months correlation between AECOM and TAMBANG is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and TAMBANG BATUBARA B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAMBANG BATUBARA B and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY are associated (or correlated) with TAMBANG BATUBARA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAMBANG BATUBARA B has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and TAMBANG BATUBARA go up and down completely randomly.

Pair Corralation between AECOM TECHNOLOGY and TAMBANG BATUBARA

Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to under-perform the TAMBANG BATUBARA. But the stock apears to be less risky and, when comparing its historical volatility, AECOM TECHNOLOGY is 1.76 times less risky than TAMBANG BATUBARA. The stock trades about -0.51 of its potential returns per unit of risk. The TAMBANG BATUBARA B is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  18.00  in TAMBANG BATUBARA B on September 27, 2024 and sell it today you would lose (1.00) from holding TAMBANG BATUBARA B or give up 5.56% of portfolio value over 90 days.

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

AECOM TECHNOLOGY  vs.  TAMBANG BATUBARA B

AECOM TECHNOLOGY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, AECOM TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TAMBANG BATUBARA B

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TAMBANG BATUBARA B are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, TAMBANG BATUBARA is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AECOM TECHNOLOGY and TAMBANG BATUBARA

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

The idea behind AECOM TECHNOLOGY and TAMBANG BATUBARA B 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.