Correlation Between PT Adaro and New HopeLtd

Can any of the company-specific risk be diversified away by investing in both PT Adaro and New HopeLtd 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 New HopeLtd 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 New Hope, you can compare the effects of market volatilities on PT Adaro and New HopeLtd 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 New HopeLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Adaro and New HopeLtd.

Diversification Opportunities for PT Adaro and New HopeLtd

0.0

Correlation Coefficient

PT Adaro  New HopeLtd

Pay attention - limited upside

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

Pair Corralation between PT Adaro and New HopeLtd

If you would invest  241.00  in New Hope on May 21, 2025 and sell it today you would earn a total of  54.00  from holding New Hope or generate 22.41% 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.  New Hope

PT Adaro Energy

Risk-Adjusted Performance

Weakest

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.

New HopeLtd

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in New Hope are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, New HopeLtd reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Adaro and New HopeLtd

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

The idea behind PT Adaro Energy and New Hope 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.