Correlation Between Aneka Tambang and Soechi Lines

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

By analyzing existing cross correlation between Aneka Tambang Persero and Soechi Lines Tbk, you can compare the effects of market volatilities on Aneka Tambang and Soechi Lines 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 Aneka Tambang with a short position of Soechi Lines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Soechi Lines.

Diversification Opportunities for Aneka Tambang and Soechi Lines

0.58

Correlation Coefficient

Aneka Tambang  Soechi Lines

Very weak diversification

The 3 months correlation between Aneka and Soechi is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Persero and Soechi Lines Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soechi Lines Tbk and Aneka Tambang 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 Aneka Tambang Persero are associated (or correlated) with Soechi Lines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soechi Lines Tbk has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Soechi Lines go up and down completely randomly.

Pair Corralation between Aneka Tambang and Soechi Lines

Assuming the 90 days trading horizon Aneka Tambang Persero is expected to under-perform the Soechi Lines. In addition to that, Aneka Tambang is 1.03 times more volatile than Soechi Lines Tbk. It trades about -0.02 of its total potential returns per unit of risk. Soechi Lines Tbk is currently generating about 0.0 per unit of volatility. If you would invest  17,800  in Soechi Lines Tbk on September 26, 2024 and sell it today you would lose (1,900) from holding Soechi Lines Tbk or give up 10.67% of portfolio value over 90 days.

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

Aneka Tambang Persero  vs.  Soechi Lines Tbk

Aneka Tambang Persero

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aneka Tambang Persero are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Aneka Tambang is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Soechi Lines Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soechi Lines Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Aneka Tambang and Soechi Lines

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

The idea behind Aneka Tambang Persero and Soechi Lines 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.