Correlation Between Aneka Tambang and Arcadia Minerals

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

By analyzing existing cross correlation between Aneka Tambang Tbk and Arcadia Minerals Ltd, you can compare the effects of market volatilities on Aneka Tambang and Arcadia Minerals 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 Arcadia Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Arcadia Minerals.

Diversification Opportunities for Aneka Tambang and Arcadia Minerals

0.21

Correlation Coefficient

Aneka Tambang  Arcadia Minerals

Modest diversification

The 3 months correlation between Aneka and Arcadia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Arcadia Minerals Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadia Minerals 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 Tbk are associated (or correlated) with Arcadia Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadia Minerals has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Arcadia Minerals go up and down completely randomly.

Pair Corralation between Aneka Tambang and Arcadia Minerals

Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to generate 0.22 times more return on investment than Arcadia Minerals. However, Aneka Tambang Tbk is 4.5 times less risky than Arcadia Minerals. It trades about 0.32 of its potential returns per unit of risk. Arcadia Minerals Ltd is currently generating about -0.27 per unit of risk. If you would invest  86.00  in Aneka Tambang Tbk on September 25, 2024 and sell it today you would earn a total of  8.00  from holding Aneka Tambang Tbk or generate 9.3% return on investment over 90 days.

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

Aneka Tambang Tbk  vs.  Arcadia Minerals Ltd

Aneka Tambang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aneka Tambang Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Arcadia Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcadia Minerals Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aneka Tambang and Arcadia Minerals

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

The idea behind Aneka Tambang Tbk and Arcadia Minerals Ltd 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.