Correlation Between RMK Energy and Baramulti Suksessarana

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

Diversification Opportunities for RMK Energy and Baramulti Suksessarana

0.77

Correlation Coefficient

RMK Energy  Baramulti Suksessarana

Poor diversification

The 3 months correlation between RMK and Baramulti is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding RMK Energy PT and Baramulti Suksessarana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baramulti Suksessarana 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 Baramulti Suksessarana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baramulti Suksessarana has no effect on the direction of RMK Energy i.e., RMK Energy and Baramulti Suksessarana go up and down completely randomly.

Pair Corralation between RMK Energy and Baramulti Suksessarana

Assuming the 90 days trading horizon RMK Energy PT is expected to under-perform the Baramulti Suksessarana. In addition to that, RMK Energy is 1.69 times more volatile than Baramulti Suksessarana Tbk. It trades about -0.05 of its total potential returns per unit of risk. Baramulti Suksessarana Tbk is currently generating about -0.06 per unit of volatility. If you would invest  462,507  in Baramulti Suksessarana Tbk on September 12, 2024 and sell it today you would lose (23,507) from holding Baramulti Suksessarana Tbk or give up 5.08% of portfolio value over 90 days.

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

RMK Energy PT  vs.  Baramulti Suksessarana Tbk

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.

Baramulti Suksessarana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baramulti Suksessarana Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Baramulti Suksessarana 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 RMK Energy and Baramulti Suksessarana

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

The idea behind RMK Energy PT and Baramulti Suksessarana Tbk 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.