Correlation Between Arwana Citramulia and PT MNC

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

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

Diversification Opportunities for Arwana Citramulia and PT MNC

-0.59

Correlation Coefficient

Arwana Citramulia  PT MNC

Excellent diversification

The 3 months correlation between Arwana and IATA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Arwana Citramulia Tbk and PT MNC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT MNC Energy and Arwana Citramulia 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 Arwana Citramulia Tbk are associated (or correlated) with PT MNC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT MNC Energy has no effect on the direction of Arwana Citramulia i.e., Arwana Citramulia and PT MNC go up and down completely randomly.

Pair Corralation between Arwana Citramulia and PT MNC

Assuming the 90 days trading horizon Arwana Citramulia Tbk is expected to under-perform the PT MNC. But the stock apears to be less risky and, when comparing its historical volatility, Arwana Citramulia Tbk is 4.73 times less risky than PT MNC. The stock trades about -0.24 of its potential returns per unit of risk. The PT MNC Energy is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,800  in PT MNC Energy on September 2, 2024 and sell it today you would earn a total of  600.00  from holding PT MNC Energy or generate 15.79% return on investment over 90 days.

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

Arwana Citramulia Tbk  vs.  PT MNC Energy

Arwana Citramulia Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arwana Citramulia Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Arwana Citramulia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT MNC Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT MNC Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Arwana Citramulia and PT MNC

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

The idea behind Arwana Citramulia Tbk and PT MNC Energy 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.