Correlation Between Golden Eagle and TBS Energi

Can any of the company-specific risk be diversified away by investing in both Golden Eagle and TBS Energi 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 Golden Eagle and TBS Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Golden Eagle Energy and TBS Energi Utama, you can compare the effects of market volatilities on Golden Eagle and TBS Energi 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 Golden Eagle with a short position of TBS Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Eagle and TBS Energi.

Diversification Opportunities for Golden Eagle and TBS Energi

-0.57

Correlation Coefficient

Golden Eagle  TBS Energi

Excellent diversification

The 3 months correlation between Golden and TBS is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Golden Eagle Energy and TBS Energi Utama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBS Energi Utama and Golden Eagle 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 Golden Eagle Energy are associated (or correlated) with TBS Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBS Energi Utama has no effect on the direction of Golden Eagle i.e., Golden Eagle and TBS Energi go up and down completely randomly.

Pair Corralation between Golden Eagle and TBS Energi

Assuming the 90 days trading horizon Golden Eagle Energy is expected to generate 0.18 times more return on investment than TBS Energi. However, Golden Eagle Energy is 5.43 times less risky than TBS Energi. It trades about 0.24 of its potential returns per unit of risk. TBS Energi Utama is currently generating about -0.08 per unit of risk. If you would invest  73,000  in Golden Eagle Energy on December 29, 2024 and sell it today you would earn a total of  8,500  from holding Golden Eagle Energy or generate 11.64% return on investment over 90 days.

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

Golden Eagle Energy  vs.  TBS Energi Utama

Golden Eagle Energy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Eagle Energy are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Golden Eagle may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TBS Energi Utama

Risk-Adjusted Performance

Very Weak

Over the last 90 days TBS Energi Utama 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 Golden Eagle and TBS Energi

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

The idea behind Golden Eagle Energy and TBS Energi Utama 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.