Correlation Between TAMBANG BATUBARA and TOTAL GABON

Can any of the company-specific risk be diversified away by investing in both TAMBANG BATUBARA and TOTAL GABON 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 TAMBANG BATUBARA and TOTAL GABON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TAMBANG BATUBARA B and TOTAL GABON, you can compare the effects of market volatilities on TAMBANG BATUBARA and TOTAL GABON 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 TAMBANG BATUBARA with a short position of TOTAL GABON. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAMBANG BATUBARA and TOTAL GABON.

Diversification Opportunities for TAMBANG BATUBARA and TOTAL GABON

0.36

Correlation Coefficient

TAMBANG BATUBARA  TOTAL GABON

Weak diversification

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

Pair Corralation between TAMBANG BATUBARA and TOTAL GABON

If you would invest  15,750  in TOTAL GABON on September 12, 2024 and sell it today you would earn a total of  2,950  from holding TOTAL GABON or generate 18.73% return on investment over 90 days.

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

TAMBANG BATUBARA B   vs.  TOTAL GABON

TAMBANG BATUBARA B

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TAMBANG BATUBARA B are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TAMBANG BATUBARA unveiled solid returns over the last few months and may actually be approaching a breakup point.

TOTAL GABON

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL GABON are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TOTAL GABON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TAMBANG BATUBARA and TOTAL GABON

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

The idea behind TAMBANG BATUBARA B and TOTAL GABON 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.