Correlation Between Macquarie Bank and Aneka Tambang

Can any of the company-specific risk be diversified away by investing in both Macquarie Bank and Aneka Tambang 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 Macquarie Bank and Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Macquarie Bank Ltd and Aneka Tambang Tbk, you can compare the effects of market volatilities on Macquarie Bank and Aneka Tambang 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 Macquarie Bank with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Bank and Aneka Tambang.

Diversification Opportunities for Macquarie Bank and Aneka Tambang

-0.59

Correlation Coefficient

Macquarie Bank  Aneka Tambang

Excellent diversification

The 3 months correlation between Macquarie and Aneka is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Bank Ltd and Aneka Tambang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Tbk and Macquarie Bank 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 Macquarie Bank Ltd are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Tbk has no effect on the direction of Macquarie Bank i.e., Macquarie Bank and Aneka Tambang go up and down completely randomly.

Pair Corralation between Macquarie Bank and Aneka Tambang

Assuming the 90 days trading horizon Macquarie Bank is expected to generate 17.15 times less return on investment than Aneka Tambang. But when comparing it to its historical volatility, Macquarie Bank Ltd is 3.28 times less risky than Aneka Tambang. It trades about 0.06 of its potential returns per unit of risk. Aneka Tambang Tbk is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  86.00  in Aneka Tambang Tbk on September 12, 2024 and sell it today you would earn a total of  8.00  from holding Aneka Tambang Tbk or generate 9.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Macquarie Bank Ltd  vs.  Aneka Tambang Tbk

Macquarie Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macquarie Bank Ltd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Macquarie Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Aneka Tambang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aneka Tambang Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Macquarie Bank and Aneka Tambang

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

The idea behind Macquarie Bank Ltd and Aneka Tambang Tbk 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.