Correlation Between Aneka Gas and Barito Pacific

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

By analyzing existing cross correlation between Aneka Gas Industri and Barito Pacific Tbk, you can compare the effects of market volatilities on Aneka Gas and Barito Pacific 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 Aneka Gas with a short position of Barito Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Gas and Barito Pacific.

Diversification Opportunities for Aneka Gas and Barito Pacific

0.19

Correlation Coefficient

Aneka Gas  Barito Pacific

Average diversification

The 3 months correlation between Aneka and Barito is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Gas Industri and Barito Pacific Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barito Pacific Tbk and Aneka Gas 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 Aneka Gas Industri are associated (or correlated) with Barito Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barito Pacific Tbk has no effect on the direction of Aneka Gas i.e., Aneka Gas and Barito Pacific go up and down completely randomly.

Pair Corralation between Aneka Gas and Barito Pacific

Assuming the 90 days trading horizon Aneka Gas Industri is expected to under-perform the Barito Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Gas Industri is 5.68 times less risky than Barito Pacific. The stock trades about -0.08 of its potential returns per unit of risk. The Barito Pacific Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  98,000  in Barito Pacific Tbk on March 8, 2024 and sell it today you would lose (2,000) from holding Barito Pacific Tbk or give up 2.04% of portfolio value over 90 days.

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

Aneka Gas Industri  vs.  Barito Pacific Tbk

Aneka Gas Industri

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aneka Gas Industri are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Aneka Gas disclosed solid returns over the last few months and may actually be approaching a breakup point.

Barito Pacific Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barito Pacific Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Barito Pacific 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 Aneka Gas and Barito Pacific

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

The idea behind Aneka Gas Industri and Barito Pacific 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.