Correlation Between GTS Internasional and RMK Energy

Can any of the company-specific risk be diversified away by investing in both GTS Internasional and RMK Energy 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 GTS Internasional and RMK Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GTS Internasional Tbk and RMK Energy PT, you can compare the effects of market volatilities on GTS Internasional and RMK Energy 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 GTS Internasional with a short position of RMK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GTS Internasional and RMK Energy.

Diversification Opportunities for GTS Internasional and RMK Energy

-0.35

Correlation Coefficient

GTS Internasional  RMK Energy

Very good diversification

The 3 months correlation between GTS and RMK is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding GTS Internasional Tbk and RMK Energy PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMK Energy PT and GTS Internasional 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 GTS Internasional Tbk are associated (or correlated) with RMK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMK Energy PT has no effect on the direction of GTS Internasional i.e., GTS Internasional and RMK Energy go up and down completely randomly.

Pair Corralation between GTS Internasional and RMK Energy

Assuming the 90 days trading horizon GTS Internasional Tbk is expected to generate 4.56 times more return on investment than RMK Energy. However, GTS Internasional is 4.56 times more volatile than RMK Energy PT. It trades about 0.43 of its potential returns per unit of risk. RMK Energy PT is currently generating about -0.22 per unit of risk. If you would invest  3,200  in GTS Internasional Tbk on October 12, 2024 and sell it today you would earn a total of  1,200  from holding GTS Internasional Tbk or generate 37.5% return on investment over 90 days.

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

GTS Internasional Tbk  vs.  RMK Energy PT

GTS Internasional Tbk

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GTS Internasional Tbk are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, GTS Internasional disclosed solid returns over the last few months and may actually be approaching a breakup point.

RMK Energy PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RMK Energy PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with GTS Internasional and RMK Energy

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

The idea behind GTS Internasional Tbk and RMK Energy PT 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.