Correlation Between Elang Mahkota and TBS Energi

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

By analyzing existing cross correlation between Elang Mahkota Teknologi and TBS Energi Utama, you can compare the effects of market volatilities on Elang Mahkota and TBS Energi 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 Elang Mahkota with a short position of TBS Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elang Mahkota and TBS Energi.

Diversification Opportunities for Elang Mahkota and TBS Energi

0.59

Correlation Coefficient

Elang Mahkota  TBS Energi

Very weak diversification

The 3 months correlation between Elang and TBS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Elang Mahkota Teknologi and TBS Energi Utama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBS Energi Utama and Elang Mahkota 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 Elang Mahkota Teknologi are associated (or correlated) with TBS Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBS Energi Utama has no effect on the direction of Elang Mahkota i.e., Elang Mahkota and TBS Energi go up and down completely randomly.

Pair Corralation between Elang Mahkota and TBS Energi

Assuming the 90 days trading horizon Elang Mahkota Teknologi is expected to generate 0.89 times more return on investment than TBS Energi. However, Elang Mahkota Teknologi is 1.12 times less risky than TBS Energi. It trades about 0.06 of its potential returns per unit of risk. TBS Energi Utama is currently generating about -0.08 per unit of risk. If you would invest  49,200  in Elang Mahkota Teknologi on December 29, 2024 and sell it today you would earn a total of  5,300  from holding Elang Mahkota Teknologi or generate 10.77% return on investment over 90 days.

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

Elang Mahkota Teknologi  vs.  TBS Energi Utama

Elang Mahkota Teknologi

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elang Mahkota Teknologi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Elang Mahkota disclosed solid returns over the last few months and may actually be approaching a breakup point.

TBS Energi Utama

Risk-Adjusted Performance

Very Weak

Over the last 90 days TBS Energi Utama 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Elang Mahkota and TBS Energi

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

The idea behind Elang Mahkota Teknologi and TBS Energi Utama 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 Stocks Directory module to find actively traded stocks across global markets.