Correlation Between Triputra Agro and Adaro Minerals

Can any of the company-specific risk be diversified away by investing in both Triputra Agro and Adaro Minerals 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 Triputra Agro and Adaro Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Triputra Agro Persada and Adaro Minerals Indonesia, you can compare the effects of market volatilities on Triputra Agro and Adaro Minerals 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 Triputra Agro with a short position of Adaro Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triputra Agro and Adaro Minerals.

Diversification Opportunities for Triputra Agro and Adaro Minerals

-0.36

Correlation Coefficient

Triputra Agro  Adaro Minerals

Very good diversification

The 3 months correlation between Triputra and Adaro is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Triputra Agro Persada and Adaro Minerals Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Minerals Indonesia and Triputra Agro 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 Triputra Agro Persada are associated (or correlated) with Adaro Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Minerals Indonesia has no effect on the direction of Triputra Agro i.e., Triputra Agro and Adaro Minerals go up and down completely randomly.

Pair Corralation between Triputra Agro and Adaro Minerals

Assuming the 90 days trading horizon Triputra Agro Persada is expected to generate 0.57 times more return on investment than Adaro Minerals. However, Triputra Agro Persada is 1.75 times less risky than Adaro Minerals. It trades about 0.15 of its potential returns per unit of risk. Adaro Minerals Indonesia is currently generating about -0.1 per unit of risk. If you would invest  71,500  in Triputra Agro Persada on December 22, 2024 and sell it today you would earn a total of  13,500  from holding Triputra Agro Persada or generate 18.88% return on investment over 90 days.

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

Triputra Agro Persada  vs.  Adaro Minerals Indonesia

Triputra Agro Persada

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Triputra Agro Persada are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Triputra Agro disclosed solid returns over the last few months and may actually be approaching a breakup point.

Adaro Minerals Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adaro Minerals Indonesia 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 Triputra Agro and Adaro Minerals

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

The idea behind Triputra Agro Persada and Adaro Minerals Indonesia 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 Stocks Directory module to find actively traded stocks across global markets.