Correlation Between Indo Oil and Anabatic Technologies

Can any of the company-specific risk be diversified away by investing in both Indo Oil and Anabatic Technologies 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 Indo Oil and Anabatic Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indo Oil Perkasa and Anabatic Technologies Tbk, you can compare the effects of market volatilities on Indo Oil and Anabatic Technologies 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 Indo Oil with a short position of Anabatic Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Oil and Anabatic Technologies.

Diversification Opportunities for Indo Oil and Anabatic Technologies

0.57

Correlation Coefficient

Indo Oil  Anabatic Technologies

Very weak diversification

The 3 months correlation between Indo and Anabatic is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Indo Oil Perkasa and Anabatic Technologies Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anabatic Technologies Tbk and Indo Oil 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 Indo Oil Perkasa are associated (or correlated) with Anabatic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anabatic Technologies Tbk has no effect on the direction of Indo Oil i.e., Indo Oil and Anabatic Technologies go up and down completely randomly.

Pair Corralation between Indo Oil and Anabatic Technologies

Assuming the 90 days trading horizon Indo Oil Perkasa is expected to generate 1.25 times more return on investment than Anabatic Technologies. However, Indo Oil is 1.25 times more volatile than Anabatic Technologies Tbk. It trades about -0.03 of its potential returns per unit of risk. Anabatic Technologies Tbk is currently generating about -0.15 per unit of risk. If you would invest  10,300  in Indo Oil Perkasa on September 16, 2024 and sell it today you would lose (300.00) from holding Indo Oil Perkasa or give up 2.91% of portfolio value over 90 days.

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

Indo Oil Perkasa  vs.  Anabatic Technologies Tbk

Indo Oil Perkasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indo Oil Perkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Indo Oil is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Anabatic Technologies Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anabatic Technologies Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Indo Oil and Anabatic Technologies

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

The idea behind Indo Oil Perkasa and Anabatic Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.