Correlation Between Asiaplast Industries and Aneka Tambang

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

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

Diversification Opportunities for Asiaplast Industries and Aneka Tambang

0.26

Correlation Coefficient

Asiaplast Industries  Aneka Tambang

Modest diversification

The 3 months correlation between Asiaplast and Aneka is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Asiaplast Industries Tbk and Aneka Tambang Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Persero and Asiaplast Industries 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 Asiaplast Industries Tbk are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Persero has no effect on the direction of Asiaplast Industries i.e., Asiaplast Industries and Aneka Tambang go up and down completely randomly.

Pair Corralation between Asiaplast Industries and Aneka Tambang

Assuming the 90 days trading horizon Asiaplast Industries Tbk is expected to under-perform the Aneka Tambang. In addition to that, Asiaplast Industries is 1.32 times more volatile than Aneka Tambang Persero. It trades about -0.01 of its total potential returns per unit of risk. Aneka Tambang Persero is currently generating about 0.02 per unit of volatility. If you would invest  142,500  in Aneka Tambang Persero on September 26, 2024 and sell it today you would earn a total of  1,000.00  from holding Aneka Tambang Persero or generate 0.7% return on investment over 90 days.

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

Asiaplast Industries Tbk  vs.  Aneka Tambang Persero

Asiaplast Industries Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asiaplast Industries Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Asiaplast Industries is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Aneka Tambang Persero

Risk-Adjusted Performance

1 of 100

Very 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.

Pair Trading with Asiaplast Industries and Aneka Tambang

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

The idea behind Asiaplast Industries Tbk and Aneka Tambang Persero 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.