Correlation Between GE Vernova and Indo Tambangraya

Can any of the company-specific risk be diversified away by investing in both GE Vernova and Indo Tambangraya 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 GE Vernova and Indo Tambangraya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GE Vernova LLC and Indo Tambangraya Megah, you can compare the effects of market volatilities on GE Vernova and Indo Tambangraya 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 GE Vernova with a short position of Indo Tambangraya. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Vernova and Indo Tambangraya.

Diversification Opportunities for GE Vernova and Indo Tambangraya

0.63

Correlation Coefficient

GE Vernova  Indo Tambangraya

Poor diversification

The 3 months correlation between GEV and Indo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Indo Tambangraya Megah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Tambangraya Megah and GE Vernova 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 GE Vernova LLC are associated (or correlated) with Indo Tambangraya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Tambangraya Megah has no effect on the direction of GE Vernova i.e., GE Vernova and Indo Tambangraya go up and down completely randomly.

Pair Corralation between GE Vernova and Indo Tambangraya

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 1.45 times more return on investment than Indo Tambangraya. However, GE Vernova is 1.45 times more volatile than Indo Tambangraya Megah. It trades about 0.01 of its potential returns per unit of risk. Indo Tambangraya Megah is currently generating about -0.06 per unit of risk. If you would invest  33,380  in GE Vernova LLC on December 27, 2024 and sell it today you would lose (1,610) from holding GE Vernova LLC or give up 4.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

GE Vernova LLC  vs.  Indo Tambangraya Megah

GE Vernova LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GE Vernova LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, GE Vernova is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Indo Tambangraya Megah

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indo Tambangraya Megah has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GE Vernova and Indo Tambangraya

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

The idea behind GE Vernova LLC and Indo Tambangraya Megah 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 Global Correlations module to find global opportunities by holding instruments from different markets.