Correlation Between TBS Energi and Abm Investama

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

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

Diversification Opportunities for TBS Energi and Abm Investama

0.01

Correlation Coefficient

TBS Energi  Abm Investama

Significant diversification

The 3 months correlation between TBS and Abm is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding TBS Energi Utama and Abm Investama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abm Investama Tbk and TBS Energi 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 TBS Energi Utama are associated (or correlated) with Abm Investama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abm Investama Tbk has no effect on the direction of TBS Energi i.e., TBS Energi and Abm Investama go up and down completely randomly.

Pair Corralation between TBS Energi and Abm Investama

Assuming the 90 days trading horizon TBS Energi Utama is expected to under-perform the Abm Investama. In addition to that, TBS Energi is 1.98 times more volatile than Abm Investama Tbk. It trades about -0.24 of its total potential returns per unit of risk. Abm Investama Tbk is currently generating about -0.27 per unit of volatility. If you would invest  398,000  in Abm Investama Tbk on September 1, 2024 and sell it today you would lose (48,000) from holding Abm Investama Tbk or give up 12.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

TBS Energi Utama  vs.  Abm Investama Tbk

TBS Energi Utama

Risk-Adjusted Performance

0 of 100

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 quite persistent forward-looking signals, TBS Energi is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Abm Investama Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abm Investama Tbk 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with TBS Energi and Abm Investama

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

The idea behind TBS Energi Utama and Abm Investama 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.