Correlation Between Indo Tambangraya and Hallador Energy

Can any of the company-specific risk be diversified away by investing in both Indo Tambangraya and Hallador 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 Hallador 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 Hallador Energy, you can compare the effects of market volatilities on Indo Tambangraya and Hallador 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 Hallador Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Tambangraya and Hallador Energy.

Diversification Opportunities for Indo Tambangraya and Hallador Energy

0.21

Correlation Coefficient

Indo Tambangraya  Hallador Energy

Modest diversification

The 3 months correlation between Indo and Hallador is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Indo Tambangraya Megah and Hallador Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hallador Energy 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 Hallador Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hallador Energy has no effect on the direction of Indo Tambangraya i.e., Indo Tambangraya and Hallador Energy go up and down completely randomly.

Pair Corralation between Indo Tambangraya and Hallador Energy

Assuming the 90 days horizon Indo Tambangraya Megah is expected to under-perform the Hallador Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Indo Tambangraya Megah is 1.7 times less risky than Hallador Energy. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Hallador Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,126  in Hallador Energy on December 29, 2024 and sell it today you would earn a total of  125.00  from holding Hallador Energy or generate 11.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Indo Tambangraya Megah  vs.  Hallador Energy

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hallador Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hallador Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Hallador Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indo Tambangraya and Hallador Energy

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

The idea behind Indo Tambangraya Megah and Hallador Energy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.