Correlation Between Agro Yasa and MNC Vision

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

By analyzing existing cross correlation between Agro Yasa Lestari and MNC Vision Networks, you can compare the effects of market volatilities on Agro Yasa and MNC Vision 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 Agro Yasa with a short position of MNC Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Yasa and MNC Vision.

Diversification Opportunities for Agro Yasa and MNC Vision

-0.33

Correlation Coefficient

Agro Yasa  MNC Vision

Very good diversification

The 3 months correlation between Agro and MNC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Agro Yasa Lestari and MNC Vision Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MNC Vision Networks and Agro Yasa 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 Agro Yasa Lestari are associated (or correlated) with MNC Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MNC Vision Networks has no effect on the direction of Agro Yasa i.e., Agro Yasa and MNC Vision go up and down completely randomly.

Pair Corralation between Agro Yasa and MNC Vision

Assuming the 90 days trading horizon Agro Yasa Lestari is expected to generate 2.75 times more return on investment than MNC Vision. However, Agro Yasa is 2.75 times more volatile than MNC Vision Networks. It trades about 0.06 of its potential returns per unit of risk. MNC Vision Networks is currently generating about -0.23 per unit of risk. If you would invest  5,100  in Agro Yasa Lestari on September 5, 2024 and sell it today you would earn a total of  700.00  from holding Agro Yasa Lestari or generate 13.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Agro Yasa Lestari  vs.  MNC Vision Networks

Agro Yasa Lestari

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Agro Yasa Lestari are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Agro Yasa disclosed solid returns over the last few months and may actually be approaching a breakup point.

MNC Vision Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MNC Vision Networks 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 Agro Yasa and MNC Vision

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

The idea behind Agro Yasa Lestari and MNC Vision Networks 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.