Correlation Between RMK Energy and Bintang Samudera

Can any of the company-specific risk be diversified away by investing in both RMK Energy and Bintang Samudera 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 Bintang Samudera 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 Bintang Samudera Mandiri, you can compare the effects of market volatilities on RMK Energy and Bintang Samudera 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 Bintang Samudera. Check out your portfolio center. Please also check ongoing floating volatility patterns of RMK Energy and Bintang Samudera.

Diversification Opportunities for RMK Energy and Bintang Samudera

-0.5

Correlation Coefficient

RMK Energy  Bintang Samudera

Very good diversification

The 3 months correlation between RMK and Bintang is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding RMK Energy PT and Bintang Samudera Mandiri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Samudera Mandiri 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 Bintang Samudera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Samudera Mandiri has no effect on the direction of RMK Energy i.e., RMK Energy and Bintang Samudera go up and down completely randomly.

Pair Corralation between RMK Energy and Bintang Samudera

Assuming the 90 days trading horizon RMK Energy PT is expected to generate 0.58 times more return on investment than Bintang Samudera. However, RMK Energy PT is 1.72 times less risky than Bintang Samudera. It trades about 0.03 of its potential returns per unit of risk. Bintang Samudera Mandiri is currently generating about 0.0 per unit of risk. If you would invest  46,594  in RMK Energy PT on October 12, 2024 and sell it today you would earn a total of  4,406  from holding RMK Energy PT or generate 9.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.45%
Values	Daily Returns

RMK Energy PT  vs.  Bintang Samudera Mandiri

RMK Energy PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RMK Energy PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Bintang Samudera Mandiri

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bintang Samudera Mandiri are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bintang Samudera disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RMK Energy and Bintang Samudera

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

The idea behind RMK Energy PT and Bintang Samudera Mandiri 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.