Correlation Between Alfa Energi and Atlas Resources

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

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

Diversification Opportunities for Alfa Energi and Atlas Resources

0.78

Correlation Coefficient

Alfa Energi  Atlas Resources

Poor diversification

The 3 months correlation between Alfa and Atlas is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Energi Investama and Atlas Resources Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Resources Tbk and Alfa 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 Alfa Energi Investama are associated (or correlated) with Atlas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Resources Tbk has no effect on the direction of Alfa Energi i.e., Alfa Energi and Atlas Resources go up and down completely randomly.

Pair Corralation between Alfa Energi and Atlas Resources

Assuming the 90 days trading horizon Alfa Energi Investama is expected to generate 0.85 times more return on investment than Atlas Resources. However, Alfa Energi Investama is 1.18 times less risky than Atlas Resources. It trades about -0.11 of its potential returns per unit of risk. Atlas Resources Tbk is currently generating about -0.2 per unit of risk. If you would invest  10,500  in Alfa Energi Investama on September 16, 2024 and sell it today you would lose (1,800) from holding Alfa Energi Investama or give up 17.14% of portfolio value over 90 days.

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

Alfa Energi Investama  vs.  Atlas Resources Tbk

Alfa Energi Investama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Energi Investama 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.

Atlas Resources Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Resources 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 Alfa Energi and Atlas Resources

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

The idea behind Alfa Energi Investama and Atlas Resources 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.