Correlation Between Adi Sarana and Abm Investama

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

By analyzing existing cross correlation between Adi Sarana Armada and Abm Investama Tbk, you can compare the effects of market volatilities on Adi Sarana and Abm Investama 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 Adi Sarana with a short position of Abm Investama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adi Sarana and Abm Investama.

Diversification Opportunities for Adi Sarana and Abm Investama

0.29

Correlation Coefficient

Adi Sarana  Abm Investama

Modest diversification

The 3 months correlation between Adi and Abm is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Adi Sarana Armada and Abm Investama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abm Investama Tbk and Adi Sarana 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 Adi Sarana Armada are associated (or correlated) with Abm Investama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abm Investama Tbk has no effect on the direction of Adi Sarana i.e., Adi Sarana and Abm Investama go up and down completely randomly.

Pair Corralation between Adi Sarana and Abm Investama

Assuming the 90 days trading horizon Adi Sarana is expected to generate 4.48 times less return on investment than Abm Investama. In addition to that, Adi Sarana is 1.17 times more volatile than Abm Investama Tbk. It trades about 0.01 of its total potential returns per unit of risk. Abm Investama Tbk is currently generating about 0.04 per unit of volatility. If you would invest  304,314  in Abm Investama Tbk on September 14, 2024 and sell it today you would earn a total of  47,686  from holding Abm Investama Tbk or generate 15.67% return on investment over 90 days.

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

Adi Sarana Armada  vs.  Abm Investama Tbk

Adi Sarana Armada

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Adi Sarana Armada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Adi Sarana is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Abm Investama Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abm Investama Tbk 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 Adi Sarana and Abm Investama

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

The idea behind Adi Sarana Armada and Abm Investama 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.