Correlation Between PT Adaro and Adaro Energy

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

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

Diversification Opportunities for PT Adaro and Adaro Energy

0.0

Correlation Coefficient

PT Adaro  Adaro Energy

Pay attention - limited upside

The 3 months correlation between PADEF and Adaro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Adaro Energy and Adaro Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Energy Tbk and PT Adaro 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 PT Adaro Energy are associated (or correlated) with Adaro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Energy Tbk has no effect on the direction of PT Adaro i.e., PT Adaro and Adaro Energy go up and down completely randomly.

Pair Corralation between PT Adaro and Adaro Energy

If you would invest (100.00) in PT Adaro Energy on January 27, 2025 and sell it today you would earn a total of  100.00  from holding PT Adaro Energy or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PT Adaro Energy  vs.  Adaro Energy Tbk

PT Adaro Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Adaro Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, PT Adaro is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Adaro Energy Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adaro Energy Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PT Adaro and Adaro Energy

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

The idea behind PT Adaro Energy and Adaro Energy 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.