Correlation Between Rig Tenders and Indo Tambangraya

Can any of the company-specific risk be diversified away by investing in both Rig Tenders and Indo Tambangraya 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 Rig Tenders and Indo Tambangraya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rig Tenders Tbk and Indo Tambangraya Megah, you can compare the effects of market volatilities on Rig Tenders and Indo Tambangraya 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 Rig Tenders with a short position of Indo Tambangraya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rig Tenders and Indo Tambangraya.

Diversification Opportunities for Rig Tenders and Indo Tambangraya

0.43

Correlation Coefficient

Rig Tenders  Indo Tambangraya

Very weak diversification

The 3 months correlation between Rig and Indo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Rig Tenders Tbk and Indo Tambangraya Megah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Tambangraya Megah and Rig Tenders 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 Rig Tenders Tbk are associated (or correlated) with Indo Tambangraya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Tambangraya Megah has no effect on the direction of Rig Tenders i.e., Rig Tenders and Indo Tambangraya go up and down completely randomly.

Pair Corralation between Rig Tenders and Indo Tambangraya

Assuming the 90 days trading horizon Rig Tenders Tbk is expected to generate 2.48 times more return on investment than Indo Tambangraya. However, Rig Tenders is 2.48 times more volatile than Indo Tambangraya Megah. It trades about 0.05 of its potential returns per unit of risk. Indo Tambangraya Megah is currently generating about 0.03 per unit of risk. If you would invest  62,000  in Rig Tenders Tbk on September 4, 2024 and sell it today you would earn a total of  3,500  from holding Rig Tenders Tbk or generate 5.65% return on investment over 90 days.

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

Rig Tenders Tbk  vs.  Indo Tambangraya Megah

Rig Tenders Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rig Tenders Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Rig Tenders may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Indo Tambangraya Megah

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Indo Tambangraya Megah are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Indo Tambangraya 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 Rig Tenders and Indo Tambangraya

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

The idea behind Rig Tenders Tbk and Indo Tambangraya Megah 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.