Correlation Between Pelayaran Nasional and Megapower Makmur

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

By analyzing existing cross correlation between Pelayaran Nasional Bina and Megapower Makmur TBK, you can compare the effects of market volatilities on Pelayaran Nasional and Megapower Makmur 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 Pelayaran Nasional with a short position of Megapower Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pelayaran Nasional and Megapower Makmur.

Diversification Opportunities for Pelayaran Nasional and Megapower Makmur

-0.62

Correlation Coefficient

Pelayaran Nasional  Megapower Makmur

Excellent diversification

The 3 months correlation between Pelayaran and Megapower is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pelayaran Nasional Bina and Megapower Makmur TBK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapower Makmur TBK and Pelayaran Nasional 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 Pelayaran Nasional Bina are associated (or correlated) with Megapower Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapower Makmur TBK has no effect on the direction of Pelayaran Nasional i.e., Pelayaran Nasional and Megapower Makmur go up and down completely randomly.

Pair Corralation between Pelayaran Nasional and Megapower Makmur

Assuming the 90 days trading horizon Pelayaran Nasional Bina is expected to under-perform the Megapower Makmur. But the stock apears to be less risky and, when comparing its historical volatility, Pelayaran Nasional Bina is 2.99 times less risky than Megapower Makmur. The stock trades about -0.06 of its potential returns per unit of risk. The Megapower Makmur TBK is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,500  in Megapower Makmur TBK on October 25, 2024 and sell it today you would earn a total of  2,900  from holding Megapower Makmur TBK or generate 38.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Pelayaran Nasional Bina  vs.  Megapower Makmur TBK

Pelayaran Nasional Bina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pelayaran Nasional Bina 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.

Megapower Makmur TBK

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Megapower Makmur TBK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Megapower Makmur disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pelayaran Nasional and Megapower Makmur

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

The idea behind Pelayaran Nasional Bina and Megapower Makmur 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.