Correlation Between Samindo Resources and TBS Energi

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

Diversification Opportunities for Samindo Resources and TBS Energi

-0.62

Correlation Coefficient

Samindo Resources  TBS Energi

Excellent diversification

The 3 months correlation between Samindo and TBS is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Samindo Resources Tbk and TBS Energi Utama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBS Energi Utama 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 TBS Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBS Energi Utama has no effect on the direction of Samindo Resources i.e., Samindo Resources and TBS Energi go up and down completely randomly.

Pair Corralation between Samindo Resources and TBS Energi

Assuming the 90 days trading horizon Samindo Resources Tbk is expected to generate 0.37 times more return on investment than TBS Energi. However, Samindo Resources Tbk is 2.7 times less risky than TBS Energi. It trades about 0.19 of its potential returns per unit of risk. TBS Energi Utama is currently generating about 0.0 per unit of risk. If you would invest  133,000  in Samindo Resources Tbk on September 5, 2024 and sell it today you would earn a total of  34,000  from holding Samindo Resources Tbk or generate 25.56% return on investment over 90 days.

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

Samindo Resources Tbk  vs.  TBS Energi Utama

Samindo Resources Tbk

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Samindo Resources Tbk are ranked lower than 15 (%) 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.

TBS Energi Utama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TBS Energi Utama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, TBS Energi 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 TBS Energi

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

The idea behind Samindo Resources Tbk and TBS Energi Utama 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.