Correlation Between Visi Media and Aneka Tambang

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

By analyzing existing cross correlation between Visi Media Asia and Aneka Tambang Persero, you can compare the effects of market volatilities on Visi Media and Aneka Tambang 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 Visi Media with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visi Media and Aneka Tambang.

Diversification Opportunities for Visi Media and Aneka Tambang

-0.55

Correlation Coefficient

Visi Media  Aneka Tambang

Excellent diversification

The 3 months correlation between Visi and Aneka is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visi Media Asia and Aneka Tambang Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Persero and Visi Media 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 Visi Media Asia are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Persero has no effect on the direction of Visi Media i.e., Visi Media and Aneka Tambang go up and down completely randomly.

Pair Corralation between Visi Media and Aneka Tambang

Assuming the 90 days trading horizon Visi Media Asia is expected to under-perform the Aneka Tambang. But the stock apears to be less risky and, when comparing its historical volatility, Visi Media Asia is 1.11 times less risky than Aneka Tambang. The stock trades about -2.23 of its potential returns per unit of risk. The Aneka Tambang Persero is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  164,500  in Aneka Tambang Persero on February 3, 2024 and sell it today you would lose (12,000) from holding Aneka Tambang Persero or give up 7.29% of portfolio value over 90 days.

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

Visi Media Asia  vs.  Aneka Tambang Persero

Visi Media Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visi Media Asia 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 basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Aneka Tambang Persero

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aneka Tambang Persero are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Aneka Tambang may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Visi Media and Aneka Tambang

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

The idea behind Visi Media Asia and Aneka Tambang Persero 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.