Correlation Between Sumber Energi and Tembaga Mulia

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

By analyzing existing cross correlation between Sumber Energi Andalan and Tembaga Mulia Semanan, you can compare the effects of market volatilities on Sumber Energi and Tembaga Mulia 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 Sumber Energi with a short position of Tembaga Mulia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Energi and Tembaga Mulia.

Diversification Opportunities for Sumber Energi and Tembaga Mulia

-0.45

Correlation Coefficient

Sumber Energi  Tembaga Mulia

Very good diversification

The 3 months correlation between Sumber and Tembaga is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Energi Andalan and Tembaga Mulia Semanan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tembaga Mulia Semanan and Sumber 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 Sumber Energi Andalan are associated (or correlated) with Tembaga Mulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tembaga Mulia Semanan has no effect on the direction of Sumber Energi i.e., Sumber Energi and Tembaga Mulia go up and down completely randomly.

Pair Corralation between Sumber Energi and Tembaga Mulia

Assuming the 90 days trading horizon Sumber Energi Andalan is expected to under-perform the Tembaga Mulia. In addition to that, Sumber Energi is 1.52 times more volatile than Tembaga Mulia Semanan. It trades about -0.08 of its total potential returns per unit of risk. Tembaga Mulia Semanan is currently generating about 0.02 per unit of volatility. If you would invest  90,000  in Tembaga Mulia Semanan on September 15, 2024 and sell it today you would earn a total of  1,500  from holding Tembaga Mulia Semanan or generate 1.67% return on investment over 90 days.

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

Sumber Energi Andalan  vs.  Tembaga Mulia Semanan

Sumber Energi Andalan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumber Energi Andalan 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.

Tembaga Mulia Semanan

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tembaga Mulia Semanan are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Tembaga Mulia 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 Sumber Energi and Tembaga Mulia

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

The idea behind Sumber Energi Andalan and Tembaga Mulia Semanan 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.