Correlation Between Indo Tambangraya and Geo Energy

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

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

Diversification Opportunities for Indo Tambangraya and Geo Energy

-0.29

Correlation Coefficient

Indo Tambangraya  Geo Energy

Very good diversification

The 3 months correlation between Indo and Geo is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Indo Tambangraya Megah and Geo Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Energy Resources and Indo Tambangraya 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 Indo Tambangraya Megah are associated (or correlated) with Geo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Energy Resources has no effect on the direction of Indo Tambangraya i.e., Indo Tambangraya and Geo Energy go up and down completely randomly.

Pair Corralation between Indo Tambangraya and Geo Energy

Assuming the 90 days horizon Indo Tambangraya Megah is expected to under-perform the Geo Energy. In addition to that, Indo Tambangraya is 1.1 times more volatile than Geo Energy Resources. It trades about -0.06 of its total potential returns per unit of risk. Geo Energy Resources is currently generating about 0.18 per unit of volatility. If you would invest  17.00  in Geo Energy Resources on December 28, 2024 and sell it today you would earn a total of  6.00  from holding Geo Energy Resources or generate 35.29% return on investment over 90 days.

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

Indo Tambangraya Megah  vs.  Geo Energy Resources

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.

Geo Energy Resources

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Energy Resources are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Geo Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indo Tambangraya and Geo Energy

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

The idea behind Indo Tambangraya Megah and Geo Energy Resources 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.