Correlation Between Makmur Berkah and Pelita Samudera

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

By analyzing existing cross correlation between Makmur Berkah Amanda and Pelita Samudera Shipping, you can compare the effects of market volatilities on Makmur Berkah and Pelita Samudera 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 Makmur Berkah with a short position of Pelita Samudera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Makmur Berkah and Pelita Samudera.

Diversification Opportunities for Makmur Berkah and Pelita Samudera

0.77

Correlation Coefficient

Makmur Berkah  Pelita Samudera

Poor diversification

The 3 months correlation between Makmur and Pelita is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Makmur Berkah Amanda and Pelita Samudera Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pelita Samudera Shipping and Makmur Berkah 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 Makmur Berkah Amanda are associated (or correlated) with Pelita Samudera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pelita Samudera Shipping has no effect on the direction of Makmur Berkah i.e., Makmur Berkah and Pelita Samudera go up and down completely randomly.

Pair Corralation between Makmur Berkah and Pelita Samudera

Assuming the 90 days trading horizon Makmur Berkah Amanda is expected to under-perform the Pelita Samudera. But the stock apears to be less risky and, when comparing its historical volatility, Makmur Berkah Amanda is 1.12 times less risky than Pelita Samudera. The stock trades about -0.08 of its potential returns per unit of risk. The Pelita Samudera Shipping is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  40,000  in Pelita Samudera Shipping on October 26, 2024 and sell it today you would earn a total of  1,000.00  from holding Pelita Samudera Shipping or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Makmur Berkah Amanda  vs.  Pelita Samudera Shipping

Makmur Berkah Amanda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Makmur Berkah Amanda 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.

Pelita Samudera Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pelita Samudera Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pelita Samudera 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 Makmur Berkah and Pelita Samudera

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

The idea behind Makmur Berkah Amanda and Pelita Samudera Shipping 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.