Correlation Between RMK Energy and Bank Artos

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

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

Diversification Opportunities for RMK Energy and Bank Artos

-0.4

Correlation Coefficient

RMK Energy  Bank Artos

Very good diversification

The 3 months correlation between RMK and Bank is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding RMK Energy PT and Bank Artos Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Artos Indonesia and RMK Energy 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 RMK Energy PT are associated (or correlated) with Bank Artos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Artos Indonesia has no effect on the direction of RMK Energy i.e., RMK Energy and Bank Artos go up and down completely randomly.

Pair Corralation between RMK Energy and Bank Artos

Assuming the 90 days trading horizon RMK Energy PT is expected to generate 0.46 times more return on investment than Bank Artos. However, RMK Energy PT is 2.2 times less risky than Bank Artos. It trades about 0.07 of its potential returns per unit of risk. Bank Artos Indonesia is currently generating about -0.26 per unit of risk. If you would invest  49,800  in RMK Energy PT on December 28, 2024 and sell it today you would earn a total of  2,700  from holding RMK Energy PT or generate 5.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

RMK Energy PT  vs.  Bank Artos Indonesia

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.

Bank Artos Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Artos Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with RMK Energy and Bank Artos

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

The idea behind RMK Energy PT and Bank Artos Indonesia 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.