Correlation Between RMK Energy and Sumber Tani

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

Diversification Opportunities for RMK Energy and Sumber Tani

0.34

Correlation Coefficient

RMK Energy  Sumber Tani

Weak diversification

The 3 months correlation between RMK and Sumber is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding RMK Energy PT and Sumber Tani Agung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Tani Agung 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 Sumber Tani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Tani Agung has no effect on the direction of RMK Energy i.e., RMK Energy and Sumber Tani go up and down completely randomly.

Pair Corralation between RMK Energy and Sumber Tani

Assuming the 90 days trading horizon RMK Energy PT is expected to under-perform the Sumber Tani. But the stock apears to be less risky and, when comparing its historical volatility, RMK Energy PT is 1.38 times less risky than Sumber Tani. The stock trades about -0.35 of its potential returns per unit of risk. The Sumber Tani Agung is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  84,500  in Sumber Tani Agung on October 9, 2024 and sell it today you would lose (3,000) from holding Sumber Tani Agung or give up 3.55% of portfolio value over 90 days.

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

RMK Energy PT  vs.  Sumber Tani Agung

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.

Sumber Tani Agung

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumber Tani Agung has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sumber Tani 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 Sumber Tani

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

The idea behind RMK Energy PT and Sumber Tani Agung 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.