Correlation Between HEXINDO ADIPERKASA and Evolution Petroleum

Can any of the company-specific risk be diversified away by investing in both HEXINDO ADIPERKASA and Evolution Petroleum 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 HEXINDO ADIPERKASA and Evolution Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HEXINDO ADIPERKASA and Evolution Petroleum, you can compare the effects of market volatilities on HEXINDO ADIPERKASA and Evolution Petroleum 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 HEXINDO ADIPERKASA with a short position of Evolution Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEXINDO ADIPERKASA and Evolution Petroleum.

Diversification Opportunities for HEXINDO ADIPERKASA and Evolution Petroleum

0.71

Correlation Coefficient

HEXINDO ADIPERKASA  Evolution Petroleum

Poor diversification

The 3 months correlation between HEXINDO and Evolution is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding HEXINDO ADIPERKASA and Evolution Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Petroleum and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA are associated (or correlated) with Evolution Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Petroleum has no effect on the direction of HEXINDO ADIPERKASA i.e., HEXINDO ADIPERKASA and Evolution Petroleum go up and down completely randomly.

Pair Corralation between HEXINDO ADIPERKASA and Evolution Petroleum

Assuming the 90 days trading horizon HEXINDO ADIPERKASA is expected to under-perform the Evolution Petroleum. In addition to that, HEXINDO ADIPERKASA is 1.21 times more volatile than Evolution Petroleum. It trades about -0.11 of its total potential returns per unit of risk. Evolution Petroleum is currently generating about -0.04 per unit of volatility. If you would invest  478.00  in Evolution Petroleum on December 24, 2024 and sell it today you would lose (22.00) from holding Evolution Petroleum or give up 4.6% of portfolio value over 90 days.

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

HEXINDO ADIPERKASA  vs.  Evolution Petroleum

HEXINDO ADIPERKASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days HEXINDO ADIPERKASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Evolution Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolution Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Evolution Petroleum is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HEXINDO ADIPERKASA and Evolution Petroleum

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

The idea behind HEXINDO ADIPERKASA and Evolution Petroleum 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.