Correlation Between Austindo Nusantara and Mahkota Group

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

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

Diversification Opportunities for Austindo Nusantara and Mahkota Group

0.38

Correlation Coefficient

Austindo Nusantara  Mahkota Group

Weak diversification

The 3 months correlation between Austindo and Mahkota is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Austindo Nusantara Jaya and Mahkota Group Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mahkota Group Tbk and Austindo Nusantara 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 Austindo Nusantara Jaya are associated (or correlated) with Mahkota Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mahkota Group Tbk has no effect on the direction of Austindo Nusantara i.e., Austindo Nusantara and Mahkota Group go up and down completely randomly.

Pair Corralation between Austindo Nusantara and Mahkota Group

Assuming the 90 days trading horizon Austindo Nusantara Jaya is expected to generate 0.78 times more return on investment than Mahkota Group. However, Austindo Nusantara Jaya is 1.29 times less risky than Mahkota Group. It trades about 0.1 of its potential returns per unit of risk. Mahkota Group Tbk is currently generating about 0.04 per unit of risk. If you would invest  69,500  in Austindo Nusantara Jaya on September 13, 2024 and sell it today you would earn a total of  4,500  from holding Austindo Nusantara Jaya or generate 6.47% return on investment over 90 days.

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

Austindo Nusantara Jaya  vs.  Mahkota Group Tbk

Austindo Nusantara Jaya

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austindo Nusantara Jaya are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Austindo Nusantara may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mahkota Group Tbk

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mahkota Group Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Mahkota Group 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 Austindo Nusantara and Mahkota Group

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

The idea behind Austindo Nusantara Jaya and Mahkota Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.