Correlation Between TBS Energi and Alfa Energi

Can any of the company-specific risk be diversified away by investing in both TBS Energi and Alfa 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 TBS Energi and Alfa Energi 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 Alfa Energi Investama, you can compare the effects of market volatilities on TBS Energi and Alfa 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 TBS Energi with a short position of Alfa Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBS Energi and Alfa Energi.

Diversification Opportunities for TBS Energi and Alfa Energi

0.7

Correlation Coefficient

TBS Energi  Alfa Energi

Poor diversification

The 3 months correlation between TBS and Alfa is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding TBS Energi Utama and Alfa Energi Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Energi Investama 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 Alfa Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Energi Investama has no effect on the direction of TBS Energi i.e., TBS Energi and Alfa Energi go up and down completely randomly.

Pair Corralation between TBS Energi and Alfa Energi

Assuming the 90 days trading horizon TBS Energi Utama is expected to under-perform the Alfa Energi. In addition to that, TBS Energi is 2.14 times more volatile than Alfa Energi Investama. It trades about -0.08 of its total potential returns per unit of risk. Alfa Energi Investama is currently generating about -0.13 per unit of volatility. If you would invest  8,800  in Alfa Energi Investama on December 28, 2024 and sell it today you would lose (1,300) from holding Alfa Energi Investama or give up 14.77% of portfolio value over 90 days.

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

TBS Energi Utama  vs.  Alfa Energi Investama

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.

Alfa Energi Investama

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alfa Energi Investama 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 TBS Energi and Alfa Energi

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

The idea behind TBS Energi Utama and Alfa Energi Investama 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 CEOs Directory module to screen CEOs from public companies around the world.