Correlation Between Alfa Energi and Terregra Asia

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

By analyzing existing cross correlation between Alfa Energi Investama and Terregra Asia Energy, you can compare the effects of market volatilities on Alfa Energi and Terregra Asia 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 Alfa Energi with a short position of Terregra Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Energi and Terregra Asia.

Diversification Opportunities for Alfa Energi and Terregra Asia

0.32

Correlation Coefficient

Alfa Energi  Terregra Asia

Weak diversification

The 3 months correlation between Alfa and Terregra is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Energi Investama and Terregra Asia Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terregra Asia Energy and Alfa 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 Alfa Energi Investama are associated (or correlated) with Terregra Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terregra Asia Energy has no effect on the direction of Alfa Energi i.e., Alfa Energi and Terregra Asia go up and down completely randomly.

Pair Corralation between Alfa Energi and Terregra Asia

Assuming the 90 days trading horizon Alfa Energi Investama is expected to under-perform the Terregra Asia. But the stock apears to be less risky and, when comparing its historical volatility, Alfa Energi Investama is 2.37 times less risky than Terregra Asia. The stock trades about -0.13 of its potential returns per unit of risk. The Terregra Asia Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,100  in Terregra Asia Energy on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Terregra Asia Energy or generate 3.23% return on investment over 90 days.

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

Alfa Energi Investama  vs.  Terregra Asia Energy

Alfa Energi Investama

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alfa Energi Investama 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.

Terregra Asia Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Terregra Asia Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Terregra Asia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alfa Energi and Terregra Asia

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

The idea behind Alfa Energi Investama and Terregra Asia Energy 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.