Correlation Between TBS Energi and Sumber Global

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

Diversification Opportunities for TBS Energi and Sumber Global

0.73

Correlation Coefficient

TBS Energi  Sumber Global

Poor diversification

The 3 months correlation between TBS and Sumber is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding TBS Energi Utama and Sumber Global Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Global Energy 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 Sumber Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Global Energy has no effect on the direction of TBS Energi i.e., TBS Energi and Sumber Global go up and down completely randomly.

Pair Corralation between TBS Energi and Sumber Global

Assuming the 90 days trading horizon TBS Energi is expected to generate 11107.0 times less return on investment than Sumber Global. But when comparing it to its historical volatility, TBS Energi Utama is 12.97 times less risky than Sumber Global. It trades about 0.0 of its potential returns per unit of risk. Sumber Global Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  13,733  in Sumber Global Energy on September 29, 2024 and sell it today you would earn a total of  23,667  from holding Sumber Global Energy or generate 172.34% return on investment over 90 days.

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

TBS Energi Utama  vs.  Sumber Global Energy

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sumber Global Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumber Global Energy 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 January 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 Sumber Global

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

The idea behind TBS Energi Utama and Sumber Global Energy 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.