Correlation Between Exploitasi Energi and Humpuss Intermoda

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

By analyzing existing cross correlation between Exploitasi Energi Indonesia and Humpuss Intermoda Transportasi, you can compare the effects of market volatilities on Exploitasi Energi and Humpuss Intermoda 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 Exploitasi Energi with a short position of Humpuss Intermoda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exploitasi Energi and Humpuss Intermoda.

Diversification Opportunities for Exploitasi Energi and Humpuss Intermoda

0.52

Correlation Coefficient

Exploitasi Energi  Humpuss Intermoda

Very weak diversification

The 3 months correlation between Exploitasi and Humpuss is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Exploitasi Energi Indonesia and Humpuss Intermoda Transportasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humpuss Intermoda and Exploitasi Energi 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 Exploitasi Energi Indonesia are associated (or correlated) with Humpuss Intermoda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humpuss Intermoda has no effect on the direction of Exploitasi Energi i.e., Exploitasi Energi and Humpuss Intermoda go up and down completely randomly.

Pair Corralation between Exploitasi Energi and Humpuss Intermoda

Assuming the 90 days trading horizon Exploitasi Energi Indonesia is expected to generate 3.72 times more return on investment than Humpuss Intermoda. However, Exploitasi Energi is 3.72 times more volatile than Humpuss Intermoda Transportasi. It trades about 0.12 of its potential returns per unit of risk. Humpuss Intermoda Transportasi is currently generating about 0.06 per unit of risk. If you would invest  800.00  in Exploitasi Energi Indonesia on September 28, 2024 and sell it today you would earn a total of  1,100  from holding Exploitasi Energi Indonesia or generate 137.5% return on investment over 90 days.

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

Exploitasi Energi Indonesia  vs.  Humpuss Intermoda Transportasi

Exploitasi Energi

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exploitasi Energi Indonesia are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Exploitasi Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Humpuss Intermoda

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Humpuss Intermoda Transportasi are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Humpuss Intermoda disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exploitasi Energi and Humpuss Intermoda

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

The idea behind Exploitasi Energi Indonesia and Humpuss Intermoda Transportasi 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 Anywhere module to track or share privately all of your investments from the convenience of any device.