Correlation Between Macquarie and Aneka Tambang

Can any of the company-specific risk be diversified away by investing in both Macquarie 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 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 Group and Aneka Tambang Tbk, you can compare the effects of market volatilities on Macquarie 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 with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie and Aneka Tambang.

Diversification Opportunities for Macquarie and Aneka Tambang

0.03

Correlation Coefficient

Macquarie  Aneka Tambang

Significant diversification

The 3 months correlation between Macquarie and Aneka is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group 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 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 Group 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 i.e., Macquarie and Aneka Tambang go up and down completely randomly.

Pair Corralation between Macquarie and Aneka Tambang

Assuming the 90 days trading horizon Macquarie is expected to generate 26.09 times less return on investment than Aneka Tambang. In addition to that, Macquarie is 1.03 times more volatile than Aneka Tambang Tbk. It trades about 0.01 of its total potential returns per unit of risk. Aneka Tambang Tbk is currently generating about 0.15 per unit of volatility. If you would invest  90.00  in Aneka Tambang Tbk on November 29, 2024 and sell it today you would earn a total of  10.00  from holding Aneka Tambang Tbk or generate 11.11% return on investment over 90 days.

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

Macquarie Group  vs.  Aneka Tambang Tbk

Macquarie Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Macquarie Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Macquarie is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Aneka Tambang Tbk

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aneka Tambang Tbk are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Aneka Tambang may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Macquarie and Aneka Tambang

The main advantage of trading using opposite Macquarie and Aneka Tambang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie 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 Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.