Correlation Between PT Adaro and Thungela Resources

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

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

Diversification Opportunities for PT Adaro and Thungela Resources

0.0

Correlation Coefficient

PT Adaro  Thungela Resources

Pay attention - limited upside

The 3 months correlation between PADEF and Thungela is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Adaro Energy and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and PT Adaro 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 PT Adaro Energy are associated (or correlated) with Thungela Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thungela Resources has no effect on the direction of PT Adaro i.e., PT Adaro and Thungela Resources go up and down completely randomly.

Pair Corralation between PT Adaro and Thungela Resources

If you would invest (100.00) in PT Adaro Energy on November 19, 2024 and sell it today you would earn a total of  100.00  from holding PT Adaro Energy or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PT Adaro Energy  vs.  Thungela Resources Limited

PT Adaro Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Adaro Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, PT Adaro is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Thungela Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thungela Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PT Adaro and Thungela Resources

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

The idea behind PT Adaro Energy and Thungela Resources Limited 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.