Correlation Between Samindo Resources and RMK Energy

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

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

Diversification Opportunities for Samindo Resources and RMK Energy

0.25

Correlation Coefficient

Samindo Resources  RMK Energy

Modest diversification

The 3 months correlation between Samindo and RMK is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Samindo Resources Tbk and RMK Energy PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMK Energy PT and Samindo Resources 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 Samindo Resources Tbk are associated (or correlated) with RMK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMK Energy PT has no effect on the direction of Samindo Resources i.e., Samindo Resources and RMK Energy go up and down completely randomly.

Pair Corralation between Samindo Resources and RMK Energy

Assuming the 90 days trading horizon Samindo Resources Tbk is expected to generate 1.62 times more return on investment than RMK Energy. However, Samindo Resources is 1.62 times more volatile than RMK Energy PT. It trades about 0.18 of its potential returns per unit of risk. RMK Energy PT is currently generating about 0.07 per unit of risk. If you would invest  159,000  in Samindo Resources Tbk on December 30, 2024 and sell it today you would earn a total of  40,000  from holding Samindo Resources Tbk or generate 25.16% return on investment over 90 days.

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

Samindo Resources Tbk  vs.  RMK Energy PT

Samindo Resources Tbk

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samindo Resources Tbk are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Samindo Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

RMK Energy PT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RMK Energy PT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, RMK Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Samindo Resources and RMK Energy

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

The idea behind Samindo Resources Tbk and RMK Energy PT 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.