Correlation Between GIBB River and Aneka Tambang

Can any of the company-specific risk be diversified away by investing in both GIBB River and Aneka Tambang 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 GIBB River and Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GIBB River Diamonds and Aneka Tambang Tbk, you can compare the effects of market volatilities on GIBB River and Aneka Tambang 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 GIBB River with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of GIBB River and Aneka Tambang.

Diversification Opportunities for GIBB River and Aneka Tambang

0.44

Correlation Coefficient

GIBB River  Aneka Tambang

Very weak diversification

The 3 months correlation between GIBB and Aneka is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GIBB River Diamonds and Aneka Tambang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Tbk and GIBB River 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 GIBB River Diamonds are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Tbk has no effect on the direction of GIBB River i.e., GIBB River and Aneka Tambang go up and down completely randomly.

Pair Corralation between GIBB River and Aneka Tambang

Assuming the 90 days trading horizon GIBB River Diamonds is expected to generate 5.28 times more return on investment than Aneka Tambang. However, GIBB River is 5.28 times more volatile than Aneka Tambang Tbk. It trades about 0.05 of its potential returns per unit of risk. Aneka Tambang Tbk is currently generating about -0.06 per unit of risk. If you would invest  3.30  in GIBB River Diamonds on October 24, 2024 and sell it today you would earn a total of  0.80  from holding GIBB River Diamonds or generate 24.24% return on investment over 90 days.

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

GIBB River Diamonds  vs.  Aneka Tambang Tbk

GIBB River Diamonds

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GIBB River Diamonds are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, GIBB River may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aneka Tambang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aneka Tambang Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Aneka Tambang is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GIBB River and Aneka Tambang

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

The idea behind GIBB River Diamonds and Aneka Tambang 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.