Correlation Between HK Metals and Alfa Energi

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

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

Diversification Opportunities for HK Metals and Alfa Energi

0.0

Correlation Coefficient

HK Metals  Alfa Energi

Pay attention - limited upside

The 3 months correlation between HKMU and Alfa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HK Metals Utama and Alfa Energi Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Energi Investama and HK Metals 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 HK Metals Utama are associated (or correlated) with Alfa Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Energi Investama has no effect on the direction of HK Metals i.e., HK Metals and Alfa Energi go up and down completely randomly.

Pair Corralation between HK Metals and Alfa Energi

If you would invest  5,000  in HK Metals Utama on December 28, 2024 and sell it today you would earn a total of  0.00  from holding HK Metals Utama or generate 0.0% return on investment over 90 days.

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

HK Metals Utama  vs.  Alfa Energi Investama

HK Metals Utama

Risk-Adjusted Performance

Very Weak

Over the last 90 days HK Metals Utama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, HK Metals is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with HK Metals and Alfa Energi

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

The idea behind HK Metals Utama and Alfa Energi Investama 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.