Correlation Between Adaro Energy and IONQ

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

By analyzing existing cross correlation between Adaro Energy Tbk and IONQ Inc, you can compare the effects of market volatilities on Adaro Energy and IONQ 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 Adaro Energy with a short position of IONQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Energy and IONQ.

Diversification Opportunities for Adaro Energy and IONQ

-0.63

Correlation Coefficient

Adaro Energy  IONQ

Excellent diversification

The 3 months correlation between Adaro and IONQ is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Energy Tbk and IONQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IONQ Inc and Adaro Energy 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 Adaro Energy Tbk are associated (or correlated) with IONQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IONQ Inc has no effect on the direction of Adaro Energy i.e., Adaro Energy and IONQ go up and down completely randomly.

Pair Corralation between Adaro Energy and IONQ

Assuming the 90 days horizon Adaro Energy Tbk is expected to under-perform the IONQ. But the pink sheet apears to be less risky and, when comparing its historical volatility, Adaro Energy Tbk is 1.85 times less risky than IONQ. The pink sheet trades about -0.01 of its potential returns per unit of risk. The IONQ Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  772.00  in IONQ Inc on September 19, 2024 and sell it today you would earn a total of  2,978  from holding IONQ Inc or generate 385.75% return on investment over 90 days.

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

Adaro Energy Tbk  vs.  IONQ Inc

Adaro Energy Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adaro Energy Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Adaro Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

IONQ Inc

Risk-Adjusted Performance

25 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in IONQ Inc are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, IONQ reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adaro Energy and IONQ

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

The idea behind Adaro Energy Tbk and IONQ Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.