Correlation Between Mnc Investama and Ciputra Development

Can any of the company-specific risk be diversified away by investing in both Mnc Investama and Ciputra Development 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 Mnc Investama and Ciputra Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mnc Investama Tbk and Ciputra Development Tbk, you can compare the effects of market volatilities on Mnc Investama and Ciputra Development 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 Mnc Investama with a short position of Ciputra Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mnc Investama and Ciputra Development.

Diversification Opportunities for Mnc Investama and Ciputra Development

0.69

Correlation Coefficient

Mnc Investama  Ciputra Development

Poor diversification

The 3 months correlation between Mnc and Ciputra is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mnc Investama Tbk and Ciputra Development Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciputra Development Tbk and Mnc Investama 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 Mnc Investama Tbk are associated (or correlated) with Ciputra Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciputra Development Tbk has no effect on the direction of Mnc Investama i.e., Mnc Investama and Ciputra Development go up and down completely randomly.

Pair Corralation between Mnc Investama and Ciputra Development

Assuming the 90 days trading horizon Mnc Investama Tbk is expected to generate 0.88 times more return on investment than Ciputra Development. However, Mnc Investama Tbk is 1.14 times less risky than Ciputra Development. It trades about -0.12 of its potential returns per unit of risk. Ciputra Development Tbk is currently generating about -0.13 per unit of risk. If you would invest  4,500  in Mnc Investama Tbk on September 1, 2024 and sell it today you would lose (700.00) from holding Mnc Investama Tbk or give up 15.56% of portfolio value over 90 days.

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

Mnc Investama Tbk  vs.  Ciputra Development Tbk

Mnc Investama Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mnc Investama Tbk 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ciputra Development Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ciputra Development Tbk 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Mnc Investama and Ciputra Development

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

The idea behind Mnc Investama Tbk and Ciputra Development 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.