Correlation Between RMK Energy and GTS Internasional

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

Diversification Opportunities for RMK Energy and GTS Internasional

0.07

Correlation Coefficient

RMK Energy  GTS Internasional

Significant diversification

The 3 months correlation between RMK and GTS is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding RMK Energy PT and GTS Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GTS Internasional Tbk 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 GTS Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GTS Internasional Tbk has no effect on the direction of RMK Energy i.e., RMK Energy and GTS Internasional go up and down completely randomly.

Pair Corralation between RMK Energy and GTS Internasional

Assuming the 90 days trading horizon RMK Energy PT is expected to generate 0.16 times more return on investment than GTS Internasional. However, RMK Energy PT is 6.1 times less risky than GTS Internasional. It trades about 0.4 of its potential returns per unit of risk. GTS Internasional Tbk is currently generating about 0.06 per unit of risk. If you would invest  49,800  in RMK Energy PT on October 27, 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 Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

RMK Energy PT  vs.  GTS Internasional 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 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.

GTS Internasional Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GTS Internasional Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, GTS Internasional is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with RMK Energy and GTS Internasional

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

The idea behind RMK Energy PT and GTS Internasional 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.